The good and bad news on the road to recovery

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The good news is that airlines are on the road to recovery faster than expected. And the bad news, many of them are not prepared for it.

North America, which is leading in the recovery, is afflicted with massive flight delays. American Airlines, United Airlines and Southwest Airlines passengers are among the worst hit.

A major problem is a shortage of pilots which resulted in hundreds of planes being grounded.

Travellers in Canada too are facing long lines at the airport due to reduced staffing.

Over in the Untied Kingdom, thousands of travellers are either denied their holiday abroad or stuck overseas after the cancellation of their flights. Passengers booked with British Airways, easyjet, Tui Airways and Wizz Air are among those affected.

How did it get to be so bad?

UK Transport Secretary Grant Shapps put it simply that too many jobs had been cut and airlines had “seriously oversold flights and holidays”.

UK airlines cut about 30,000 jobs, almost half the number employed in 2019. Thousands of other airport support staff had also been let go.

Yet this was only to be expected at the height of the pandemic. It made economic sense then. The present problem is exacerbated by staff forced into early retirement during the pandemic and others who have sought alternative employment elsewhere and prefer not to return to the industry.

True, airlines are biting off more than they can chew. They can do better. They in turn blame the authorities for not doing enough to support them. There are issues of long employment vetting and training of new staff. Unions think not enough consideration is given to pay and work conditions.

The situation has developed into a blaming match. What is needed now is for all parties to work together and think of the customers who invariably end up being the worst off through no fault of theirs.

How will 2022 play out?

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The experts did not get it right more than once before. How will 2022 play out? If January so far is any indication, it is not all that rosy as the World Health Organization (WHO) warns that it would be a mistake to treat Omicron as a mild infection.

Yet it does not hurt any more than ever to continue to be optimistic since that in itself psychologically at least paves the way to recovery.

Unfortunately as the world prepares to live with COVID-19, it is too often forced to be reactionary as new waves of infection threaten to scuttle all efforts thus far to maintain some sense of normalcy.

Indeed, the mirror has two sides. It depends on how you read the writings on the wall. Any prediction will be as good as it is temporary until there are clear and definite signs of a steady trend, and as valid as how one interprets the signs of the times.

Before the emergence of Omicron, the International Air Transport Association (IATA) expected demand for air travel to rise to 61 per cent of pre-pandemic levels in 2022 compared to 40 per cent in 2021. Total passenger numbers are expected to grow to 3.4 billion compared to 2.3 billion previously. Consequently, IATA forecast that airlines would lose US$11.6 billion globally in 2022 compared to losses of US$51.8 billion last year. In fact, IATA was more bullish about North American carriers making profits of US$9.9 billion in 2022 compared to losses of US$5.5 billion in 2021.

Omicron may have dampened that optimism somewhat. IATA has yet to revise its forecast. As more countries reimpose stricter restrictions on travel, the forecast is likely to be adjusted downward but not drastically, particularly when there is still a long way to go in the year.

The optimism, however, is not misplaced.

What is clear is that domestic travel will continue to outperform international routes since restrictions are defined by national borders. Travel within the United States and within China, for example, are likely to maintain its level, and within Europe as a whole depending on cross-border agreements. Little surprise therefore for the bravado of small and low-cost carriers seeking new routes and expanding their fleet. Allegiant Air for one has announced its decision to purchase 50 Boeing 737-Max jets. Earlier in November at the Dubai Airshow, four carriers namely Wizz Air, Frontier Airlines, Volaris and JetSMART collectively placed an order for 255 Airbus A321 family aircraft.

Globally the recovery will be patchy by regions. Asia Pacific is likely to lag behind other markets where international travel is concerned in light of the comparatively stricter travel rules. Hong Kong, for example, continues to adhere to a zero-COVID policy as in mainland China.

Increasingly there are signs of COVID-fatigue, which explains the pent-up demand for limited seats where the rules allow. Of course, many people too are still not prepared to expose themselves to the risk of infection in an enclosed environment such as an aircraft cabin besides having to comply with additional entry regulations and cope with changing rules. But it is a standing aviation axiom that capacity creates demand.

The fatigue has raised the social pressure on the powers to be to consider relaxing rather than reintroducing travel restrictions. This is noticeably more prevalent in regions like North America and Europe than Asia Pacific. A number of airlines, airport operators and other travel industry players are beginning to join the lobby.

Air Canada, WestJet and Toronto’s Pearson International Airport are calling on the Canadian government to revert to randomly testing arriving passengers from abroad and requiring isolation only if they test positive or exhibit symptoms of infection. The United Kingdom will no longer require pre-departure test for returning travellers and the need for self-isolation.

UK prime minister Boris Johnson said, “Omicron is so prevalent these measures have a limited impact on the growth in cases while continuing to pose significant cost to our travel industry.”

Admittedly, it is not just about checking the spread of the coronavirus but also how to ensure survival of the travel industry (and the economy) at the same time, hence the often quoted phrase of a “balanced approach”.

The push to vaccinate more people continues. More countries are making it mandatory for travel, and this is a positive sign for the airlines and travel industry.

Interestingly, a study shows that a fourth booster implemented by Israel does not really prevent Omicron infection. There are two ways of looking at the findings for what they are worth. Does it mean more travel restrictions until a more effective solution is found? Or, ironically, does it make it more compelling to live and let live while continuing the search for the antidote?

There is comfort in the belief that the mutation will weaken over time. The question is when. Be that as uncertain as it is, to borrow the words of the French Sports Ministry spokesperson referencing the vaccination rules for the French Open scheduled for May this year, “The situation may change between now and then and we hope that it will be more favourable.”

Tthe pandemic has given the airline industry a new perspective on time. It is still a long runway for 2022.