Specialist
Former Director at International Air Transport Association (IATA)
Agenda
- European air travel recovery post-coronavirus and regional drivers
- Airlines’ financial strategy and capacity decisions
- Pricing dynamics as traffic returns for EasyJet (LON: EZJ), Ryanair (LON: RYA), Lufthansa (ETR: LHA) and others
- Potential bottlenecks – labour, fleet management and maintenance
Questions
1.
Commercial air traffic reached around 65% of 2019 levels in summer 2021. Could you outline the state of air traffic in Europe and how the recovery has progressed? What are the key industry trends?
2.
How are low-cost carriers positioned vs full-service carriers heading into the end of summer 2021? How have these operators managed the downturn throughout?
3.
You drew a line between leisure travel recovering and business travel remaining low. What proportion of business travel do you think might have been permanently lost? What percentage do you expect to come back? How exposed are airlines to the business traveller segments?
4.
How much capacity has left the European short-haul market throughout the pandemic? Alitalia and Tap announced meaningful fleet reductions. What are your expectations for capacity returning over the next two years or so?
5.
Ryanair has been aggressive in expanding its base footprint and has started taking delivery of more Max jets. What are your thoughts on how Ryanair has positioned itself to expand its market share post-pandemic? How will that impact its more weakened rivals as they try to ramp up to meet increasing traffic?
6.
Wizz Air has been one of the more aggressive low-cost carriers, adding around 18 bases throughout the pandemic. What do you think about Wizz Air’s ability to challenge Ryanair’s positioning, especially in destination markets such as Italy and Greece as leisure travel returns?
7.
Do you think there is any limit to the number of bases Wizz Air can effectively manage? Would you expect a reduction of bases as it assesses which routes are working and which aren’t, or do you think the bulk number of bases is part of its strategy to challenge Ryanair?
8.
How might an increasing amount of direct route competition impact low-cost carriers? What do you think would differentiate winners from losers in establishing networks in hot leisure markets such as Italy and Greece?
9.
How well are Ryanair and Wizz Air able to drive ancillary revenues compared to one another? What kinds of offerings do they have? Is there more opportunity for them to offer additional products or services for ancillary revenue sources?
10.
Where do you expect ticket prices to head as we enter the end of summer and beginning of autumn 2021? Do you think ticket prices will return to pre-coronavirus levels?
11.
There has been a shift towards small airports and point-to-point. How have airlines changed their route models and networks to adapt to this downturn? Are there now more point-to-point routes compared to
traditional hub-and-spoke models for full-service carriers?
12.
What challenges do you think European carriers will face as they try to re-establish their long-haul networks, across fleet readiness or finding slots and room at US airports?
13.
IAG [International Airlines Group] expects around 75% capacity in Q4 2021 and others have expectations in the 60-75% range. How dependent would you say these forecasts are on the opening of the US and Europe corridor in both directions? Which airlines are more dependent on this being re-established with demand and routes?
14.
What are your expectations for seasonality trends this year? Would you expect passenger levels to fall off or the increases to slow due to less summer and holiday traffic?
15.
What kind of earning potential do you think there is for cargo as we exit the pandemic? Would you expect it to grow in importance due to increased and sustained e-commerce?
16.
There have been shorter booking windows as passengers wait to buy tickets until closer to take-off date. With changing restrictions and patterns, how do you think that reduced visibility on bookings will impact airlines’ capacity planning processes or the ways they seek to allocate routes and capacity?
17.
Fraport has applied to raise charges by around 4% and expects the regulator to approve that change in Q4 2021. Could you discuss any cost headwinds or market changes around airports and their charge structures with airlines?
18.
Have any specific airlines tried to shift their base structures to find lower fees in smaller airports, or not so much yet? Would you highlight any differences between how low-cost and full-service carriers approach base placement and airport route allocation?
19.
What are your initial thoughts on the European Commission’s Fit for 55 proposal, which would introduce a tax on jet fuel and require some sustainable aviation fuel blending? How could that potential policy impact the industry’s recovery?
20.
What do you think about the cost-cutting programmes impacting airlines’ ability to meet traffic? Are there any other potential bottlenecks in meeting increased demand, possibly with labour or fleet readiness?
21.
What are the greatest challenges facing the industry as traffic increases? What do you think airlines will have to manage most effectively in the coming year or two?
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