LONDON – OAG has warned that the Transatlantic market (TATL) may reduce by US$7bn going into the Winter due to the effects of the COVID-19 pandemic.
This comes following measures by the US Government and other states over the last six months due to significant border closures.
A Tough Winter Ahead
In the Winter 2018/19 season, the UK market generated US$3.573bn on UK-US flights, with the top ten European country markets bringing the total value of the market of US$9.952bn. OAG is predicting that going into the Winter 2020/21 season, revenues may only be forecasted to be around US$2.3bn, US$7.2bn less than the last winter schedule.
The UK market will account for a negative variance of US$2.9bn out of the US$7.2bn, nearly accommodating for half of all TATL revenues. From 26.9 million seats available in 2018/19 to just 6.9 million forecasted for this Winter season, it is understandable why the revenues will no doubt drop.
OAG even stated that things could get even worse into the winter, with some forecasts suggesting a US$10bn decrease in revenue shortfall altogether.
Implications for the Summer?
The analyzing company then went on to say that if changes are not made rapidly to business plans in terms of consumer confidence, the Summer 2021 schedule will not be easy. OAG is expecting airlines to be in a much weaker position if changes are not made to kick-start recovery a lot faster than the 2024 targets predicted by European airports.
With the International Air Transport Association (IATA) predicting airline losses will amount to $84bn in 2020 alone, this means that TATL traffic accounts for 8.5% of sales lost, which is a significant chunk.
Demand for TATL over the Winter season is already being changed around, either adding or removing frequencies. But in the case of U.S travel restrictions, this will continue to decrease until things are loosened.
For The Smaller Markets
For the smaller TATL markets such as Belgium, it is of significant interest to get borders opened up for tourism, especially as there are only 435,715 seats that were in-capacity for 2018/19’s Winter season.
If the seats continue to be eradicated, then it will place Belgian airports into considerable downfall, as the likes of Brussels (BRU) rely on heavy international traffic across the pond. For this winter, Belgium’s capacity is only forecasted to be 162,240, which is a decrease of 37.2%. this is a huge decrease for a 12-month period.
If the forecasts actually turn out to be worse, then the country could lose up to 50% of its TATL business, which will not be good for airport revenue.
What Needs to be Done?
As OAG has said, while airlines are focusing on cost-cutting measures to survive the pandemic, the right balance needs to be found in regards to getting demand for air travel rising again.
With IATA saying that the industry cannot wait for a vaccine, the recommendations looking ahead by those in the industry are for further COVID-19 airport testing, as explained by the International Civil Aviation Organisation (ICAO).
In the meantime, airlines need to start producing more results in terms of consumer confidence, with governments needing to turn away from the use of quarantining and move more in the direction of COVID testing.
Without that, then the industry is going to be in for a winter season that will not be forgotten. Demand needs to rise, or aviation will fall.
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