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There is not much you can do when your business is to fly people around the world and the world is in lockdown with no one free to move around as they want.
Not all that long ago, competition was the biggest worry for budget airlines as demand for cheap and cheerful air travel saw low-cost carriers popping up everywhere. Carriers were tripping over themselves in a rush to get bums on seats as cheaply as possible.
No frills and no food were compensated for by dirt-cheap airfares that put overseas travel in the price-range of almost everyone and even gave domestic travellers a cheaper alternative to the train. Leisure and business travellers alike scrambled their way on to packed aircraft which ended up resembling buses during rush-hour.
The notion that something could come along and not only disrupt that, but put a stop to it altogether, would have been unthinkable. The Icelandic ash cloud that grounded flights for six days back in April 2010 seemed unreal at the time for its ability to cause disruption to air travel across western and northern Europe. But, if back then it felt like the world had ground to a halt, in the past year it really did.
While other businesses have been forced to adapt to survive, there really is not any wiggle room if you are an airline. Virtual/online air travel is simply not an option. The impact therefore has been devastating. And that is before you factor in the impact of virtual meetings on the ‘need’ businesses used to have to send their staff across the globe for face-to-face meetings that have successfully taken place online for more than a year now.
Running a budget airline was never been a picnic. Now the question is whether the pandemic has well and truly put the kybosh on this already-strained business model.
At the root of its resurgence or demise is the million-dollar question as to whether sufficient numbers of travellers will come back. Will they be prepared to brave the uncertainty of constantly changing travel rules, the costs associated with mid-pandemic travel and the sheer hassle of air travel?
British Airways has pointed out to prospective passengers to Portugal, one of the few destinations on the “green list” of countries with no requirement for quarantine by returning travellers, that they could be turned around and sent home if they do not have a “valid reason” for travel. Apparently, simply taking a holiday will not cut it, it warns.
We will have to see what happens next. I’m sure the date of 17 May has been circled in red in airlines, tour operators and travellers’ diaries ever since the latest roadmap to easing was laid out. But right now, it does not look set to be the sort of travel take-off everyone had been hoping for.
While easyJet (EZJ) customers are a hardy bunch, who clearly value cut-price flights over convenience and comfort, even they might find these beginning-of-the-end-of-the-pandemic-measures a step too far.
It is difficult to tell how this will all play out in the near term. But the situation to date has been dire. For the year to the end of September 2020, pre-tax losses at easyJet came in at £1.27 billion. That compares with a profit of £430 million year-on-year, as revenue slumped 52.9% to £3.01 billion.
Total airline revenue per seat decreased by 10.6% to £54.35 and passenger numbers for the year decreased by 50.0% to 48.1 million. Not surprisingly, no final dividend was recommended.
Looking ahead, back when it posted its last set of figures in November, easyJet expected to fly no more than about 20% of planned capacity for the first quarter of 2021. Even that, of course, has not happened.
Demand is probably likely to be there. The airline reported a staggering 900% increase in sales in the days following the lifting of quarantine for the Canary Islands back in October. It’s just a case of travellers being set free from government restrictions to travel. And the way the UK government’s ‘are they/aren’t they?’ handling of the easing of lockdown is going, that full free-and-easy and much-needed freedom could be a while coming yet.
easyJet’s first-half results are due out on Thursday.
More on easyJet
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