Discount airlines maybe gone forever
Joseph Hall
other
There once was a time when the skies were glamorous, reserved for jet setters tracing vapour trails to Rio and the Riviera. The rest of us loaded up the station wagon — Griswold vacation style — and drove to a campground or a rental on Georgian Bay.
Cheap flights changed that dynamic.
But with COVID-19 annihilating the airline-industry model that made flying affordable, those long-ago times may well be back.
The airline industry is now in tatters, posting hundreds of billions of dollars in losses. And experts are predicting that costly new safety measures will lead to the demise of discount airlines and a significant jump in ticket prices.
From fewer seats on flights, to longer boarding times, to reconfiguring airports for social distancing even before passengers leave the ground, this pandemic has clipped the wings of both business and pleasure travellers and may have lasting effects.
“The elite will always fly … the rich and famous are doing that as we speak,” says Ambarish Chandra, an airline industry expert at the University of Toronto’s Rotman School of Management.
“But if I had to make a prediction I would say that flying will become a lot more expensive, there will be a lot fewer options and so you would have to be quite affluent and have a very good reason to fly to be able to justify it,” Chandra says.
The strategy that made flight affordable to the masses was simple — cramming as many people as possible into a plane and turning that aircraft around within an hour of touchdown with another jammed load, says Chandra.
Social distancing will put an end to that, he says.
And that means far fewer passengers on planes that will need to be sanitized for hours before reloading.
“So the cost of travelling is going to go up, that’s a fact,” says Frederic Dimanche, director of the Ted Rogers School of Hospitality and Tourism at Ryerson University.
The number of seats on commercial planes could fall to 50 or 60 per cent of current configurations, says Dimanche, and airlines will have to raise prices to make flights viable.
Another factor that may drive airplane travel to the realms of the rich is the almost certain demise of the posh business class seating that helped make many airlines profitable.
Dimanche says the risk of infection and longer security and boarding times — possibly double the pre-pandemic cattle lines — will discourage most business travel.
“The quick business trip of a day or the round trip from one place to another is dead,” he says.
“People are not likely to be willing to spend so much time in the airport and on the plane … just for a meeting that they’ve found out in the last two months they can do by Skype or Zoom or Microsoft Teams.”
But, he adds, in our globalized society, where relatives and friends are spread across the country and continents, people will still be lured to fly.
It’s the extended weekend getaway to the Caribbean or the week at the beach in Mexico that are no longer viable, he says.
“People are going to be reallocating their priorities in terms of type of trip, destinations, and budget for sure.”
And that could mean more people will be hitting the road, returning to family camping trips or drives to the lake for their leisure travel.
“We’ll go to something out of the past,” Dimanche says.
The first sector of the airline industry to suffer from COVID-19 will almost certainly be the discount carriers, whose thread-thin margins depend entirely on the quick turnaround, sardine-can flights that the virus will almost certainly eradicate, Chandra says.
“I wouldn’t be shocked to see many, many airlines just finding it unsustainable to keep operating,” he says.
“I would expect big, national carriers (like Air Canada) to continue in some form, struggle on through the crisis and emerge at the other side. But it’s hard to imagine how the smaller airlines are going to compete.”
And any move to quell passenger fears by eliminating seating would also eliminate any potential profits the discount carriers could hope for, Chandra says.
“It completely undermines the economics of flying for these … airlines,” he says.
Governments will almost certainly help some airlines through the crisis and beyond, especially given the vital role they are currently playing as cargo and emergency personnel carriers, Chandra says.
“But it’s hard to believe governments would bail all of them out because that would be a massive amount of money,” he adds.
“So my guess is we see sharply lower competition, which would mean that airfares would have to rise which would (also) mean the days of leisure travel, people just jetting off for the weekend to some holiday destination seem like they are over.”
Jim Scott, president and CEO of Edmonton-based Flair airlines, the country’s third largest, certainly hopes that is not the case.
The discount airline has been flying successfully under the load-’em-up strategy since 2005.
He is counting on equitable government aid to help his airline survive.
Ottawa should not pick favourites when dealing with an airline crisis that has seen passenger loads drop by 90 per cent during the pandemic, says Scott.
He is looking for the federal government to underwrite loans that, he says, Flair would repay within two years.
This is a critical time for a cash infusion and if the government doesn’t step in now “we’re going to see ourselves back to that (Air Canada WestJet) duopoly where our airfares are probably the most expensive of any G-7 country,” he says.
As air travel gets ready to open back up under the new conditions, Scott says Flair is looking at options that include passengers paying a premium to have the seat beside them empty.
“This is going to be a reality, I think because people are going to want to have some empty space next to them and they’re going to be prepared to pay for it.”
But it’s not just the in-flight experience that is going to change, says Dimanche. The airport experience will change, too.
Many of the international airports built over the past two decades, including Toronto’s Pearson, were created as cathedrals of commerce and opulence — elements that will largely disappear with the demands of the current disease.
In one sense it was fortunate the terminals were built on a monumental scale, Dimanche says. “We’re going to need that space because we’re going to have to spread out.”
But he expects the high-end retail, art and entertainment installments the space was meant to accommodate to largely disappear.
“We don’t want people to stay in the airport anymore, but when they are at the airport they are going to have to be following very, very precise procedures with distancing, so we will need the space,” Dimanche says.
But even with all those measures in place, the pandemic has likely spread a fear of flying though the population that could hobble the airline industry for decades.
“Every cabin is sort of the perfect environment for germs to spread (whether) your neighbour is three feet away as opposed to six inches away,” Chandra says.
Adds Dimanche: “It’s a total change of behaviour that we need to be ready for.”
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