Aviation: why low-cost companies will impose their model

Published on : 18/11/2020 – 09:46Modified : 18/11/2020 – 09:51

In Europe, air traffic is still at its lowest, because of the second wave of coronavirus. Both airports and companies are in “survival” mode, only low-cost companies today seem able to overcome the ordeal of the pandemic.

The Briton Easyjet recognized yesterday Tuesday significant losses, a billion pounds in the first half, but it remains optimistic, says it is ready to bounce back, to align its devices on the tarmac at the slightest quiver of demand. Ditto for Ryanair which lost only 193 million euros in 2020. The Irish company known for the shock treatment it can inflict on its passengers and its staff appears as the big winner of the crisis with its Hungarian rival Wizz . All these companies have an immediate advantage, it is their market, the short and medium haul, the only one to survive in Europe, while the long haul traffic, ensured by the big national companies, collapsed with the closure of the borders. Their strength over time is their tight management, Easyjet cut a third of its jobs at the start of the crisis.

On the other hand, the historic companies are still wondering how they will spend the winter

At the British IAG, the atmosphere is twilight: 11 of these airbuses initially stationed in Châteauroux in central France for six months are sent to Madrid for a hibernation of which no one is able to predict the end. Air France thought to limit the breakage in December with a 20% drop in flights, it now expects a 60% drop compared to 2019. For the future it is counting on its low-cost subsidiary Transavia which will have to ensure the domestic flights. The German Lufthansa is devoid of this asset, so it converts to the revenues of the low cost. She announced yesterday that snacks on board will now be chargeable.

Is the model of low-cost companies taking hold?

Even in the Gulf: the Emirati Etihad leaves the short and medium haul to its low-cost subsidiary Air Arabia to concentrate on the long haul. The States, which are in great demand at the moment, will not forever support their national companies, their change seems inevitable today. They will have to tighten all their costs, to preserve what is still their preserve, long haul. A niche for the moment not compatible with the excessive exploitation of aircraft and crews, practiced by low-cost companies, those who have attempted the adventure have broken their teeth.

European airports are also very worried about their future

According to their association – which yesterday held its general assembly in virtual format, of the 500 members, nearly 200 are on the verge of bankruptcy. To maintain the traffic they gave discounts to the companies but today they are out of breath. Their costs are fixed, and their traffic-based resources have dried up. In November with the second wave of the coronavirus, attendance fell 90% from last year. They are urgently calling for public aid, and rapid Covid tests rather than quarantines to bring travelers back. Ultimately their fate also depends on low-cost companies, the only ones that still have abundant liquidity, billions of euros for Ryanair for example, but companies not very inclined to practice charity. There is no question for the Irish to pay more fees, this company like the others will continue to favor the best bidding airports.

►In short

Paris is now one of the most expensive cities in the world

As expensive as Zurich and Hong Kong. All three cities top the UK weekly’s ranking The Economist. Everywhere the cost of living has fallen with the pandemic but European cities are more expensive because of the rise of the euro and the Swiss franc against the dollar.

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