Routes
Low-cost carriers enjoy advantages in the post- pandemic market, such as freedom from the debts legacy airliners have shouldered.
people outside the aviation industry – but when you look at it from our side you have a favourable market to build an airline,” says Birgir Jónsson, CEO of PLAY. “Brand new aircraft become available for the best prices, lease rates are nearly a quarter lower than pre-Covid, airports are willing to fill gaps and there are a lot of staff looking for work.” An ultra low-cost carrier based in Iceland, PLAY began flying between Iceland and Europe in 2021, and has recently begun adding services to North America. Flights to Baltimore and Washington, DC, commenced on 20 April 2022, followed by flights to Boston in May and New York in June. Jónsson says the carrier’s mission is to make transatlantic travel affordable.
“One of the challenges we’ve seen, in terms of business travel, is that everyone’s flying to the same destinations, which makes it really hard to raise fares.”
George Ferguson 45% OAG 26
The market share for low-cast carriers in Western Europe, up from 36.9% before Covid-19.
“We’re expecting to turn a profit during the second half of the year, so obviously we are looking for demand and our load factor to increase as the year continues,” he says. “Our booking flow is strong, our new destinations have been very well received, and I believe that we are expanding our network and operation at precisely the right time as the demand in the market increases.” He adds that PLAY will have the flexibility to minimise the impacts of high oil prices, having implemented a fuel surcharge that varies between markets and destinations. “As in life itself, there is always some uncertainty, but we are absolutely on track to realising our vision of building PLAY into a profitable airline operating a hub-and-spoke transatlantic network,” he says.
Changes to come
Low-cost carriers may have another weapon in their arsenal this summer, namely the resumption
of so-called ‘use it or lose it rules’. Under EU regulations, airlines must use their slot 80% of the time, or hand the permit back. While the level was cut to 50% during the pandemic, the UK government has moved back to a 70% policy and the EU Commission to 64% – just in time for the summer season. Given their increase in capacity, budget airlines are less likely to fall foul of these rules, which could cause headaches for their full- service competitors. If you simply cannot attract the passengers you need on board, retaining your slot could mean running near-empty ‘ghost flights’ at considerable cost to the environment. This was a problem even before the slot rules intensified – official data reveals that 14,472 ghost flights (with less than 10% passenger capacity) left UK airports between March 2020 and September 2021. The new requirements could further encourage this wasteful practice. Lufthansa boss Carsten Spohr said that the airline would need to run 18,000 “extra, unnecessary flights” over the winter in order to secure its take-off and landing rights. With little risk of flying empty themselves, the likes of easyJet and Wizz Air have been vocal about wanting slot rules to return. “Airlines will be very focused on trying to keep those slots, and I would think the low-cost carriers are better positioned to do it, because they can do so at a lower fare point,” says Ferguson. “They can watch around the world, and if existing airlines can’t afford to fly profitably in some of these slots, they can come in and get access to an airport they didn’t previously have access to.” At least over the short and medium-term, then, low-cost carriers are becoming ‘a’ – if not ‘the’ – dominant force in the aviation industry. So, will this trend persist over the longer term? Ferguson thinks not, arguing that the turning point will happen once business travel starts to pick up.
“One of the challenges we’ve seen, in the absence of business travel, is that everyone’s flying to similar destinations, which makes it really hard to raise fares,” he says. “Once you do get the business traveller back, you’ll see that diversification come back to networks and then that’ll start to improve fares too, especially for the full-service carriers.” However, summer 2022 looks poised to be the season of the cash-strapped holidaymaker, seeking the best deal on their flights after two years stuck at home. “We see lots of reasons for confidence for travel and for easyJet this year, and we expect to be near 2019 levels of flying for this summer,” says Dekkers. “There is also a strong turnaround with huge pent-up demand, which we see each time restrictions are lifted. As those continue to ease, and with many destinations now completely restriction- free for vaccinated travellers, we would expect to see even greater confidence for travel.” ●
Future Airport /
www.futureairport.com
VanderWolf Images/
Shutterstock.com
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