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2021 should become a year of transition for companies, allowing people to experience 208 million trips each year. At best, the way forward will be set, and the progress of the return will depend on the pace of vaccination, access to capital, government policies, and the virus’s still unpredictable unpredictability. We will certainly see big leaps, including the first commercial flights into near space.
These are some of the changes you are expected to see over the next 12 months.
Price wars
Air traffic cannot wait to accelerate further until vaccines saturate the population of each country to a level that reduces the level of infections. Even then, additional efforts may be needed to get people back on airplanes. According to Michael O’Leary, CEO of Ryanair Holdings Plc, this means that the lowest ticket prices in Europe will be just € 9.99. Other ideas to attract travelers include free hotel accommodations, two-for-one deals, and free travel insurance.
Promotions offered by airlines, such as China Eastern Airlines Corp.’s unlimited flights for a price, have proven very popular and will continue this year, while online agents are tempted by extremely cheap travel in China during the celebration. of the New Year next month.
The key question is how long it will take to steer customers away from all these incentives. Leisure and family travel should increase mid-year (depending on the region). A more lucrative business flow is likely to be left behind, as companies are not yet determined to send their people on business trips. John Grant, chief analyst at flight booking company OAG, says the recall won’t be called recall until travelers need a decoy and carriers make a profit.
Hunt for money
2020 airlines raised record amounts of money. In 2021, even more funds will be needed. The sale of shares and the conversion of debt will become increasingly important as companies try to restore healthy balance sheets. The government, which Moody’s said provided 220 billion euros last year, state aid dollars, will continue to play an important role.
France and the Netherlands, Air France-KLM’s largest shareholders, are considering a few billion euros, some of the 10.4 billion euros already lent. in a hybrid debt. Companies like EasyJet Plc are likely to attract more capital, while burning cash remains a concern, says Daniel Roeska, an analyst at Sanford C. Bernstein. Some airlines are in more dire straits than others.
Norwegian Air Shuttle ASA’s court-supervised restructuring plan is based on attracting new investment and it is likely to exit the low-budget transatlantic business for which it has been famous thus far. Creditors of bankrupt Thai Airways International Pcl will consider a rehabilitation plan in February. Malaysia’s long-haul airline AirAsia X Bhd. And Nok Airlines Pcl of Thailand also intend to present their future plans in the coming months.
US airlines will receive $ 15 billion. dollars in federal aid to allow until March 31. pay employees wages other than $ 25 billion. dollars of similar support provided in 2020. The US Department of the Treasury has given airlines more access to multi-billion dollar loans.
Changes in airlines
Dozens of airlines have disappeared or have declared bankruptcy since the start of the pandemic. Many of them even barely breathe or are at risk of being swallowed by stronger players. In Germany, Deutsche Lufthansa AG, together with vacation specialist Condor, offers routes to sunny destinations such as Zanzibar and Corfu. Condor, formerly a division of Lufthansa, 2019 surviving the failure of then-parent company Thomas Cook could become a tempting target.
However, some large players, such as Lufthansa, who have accepted the financial aid measures proposed by the government, may be prevented from acquiring it. In India, Tata Sons Ltd. bought a stake in partner AirAsia Group Bhd. In a local joint venture. State-owned Air India is another potential target, possibly through Vistara, a joint venture between Tata and Singapore Airlines Ltd. A potential Air India buyer “would definitely have to downsize the company,” said James Teo, an analyst at Bloomberg. Intelligence.
© DELFI / Josvydas Elinskas
Space travel
After many years of work and early predictions, the first “ordinary” space adventure seekers in 2021 should finally soar to the stars when billionaire Richard Branson announces the first commercial near-orbit flights with Virgin Galactic Holdings Inc. The company has informed investors that the spacecraft will fly to Branson from New Mexico in the first quarter and then begin serving the first 600 customers who paid $ 250,000 for tickets.
Branson’s business has faced competition from Jeff Bezos, who is developing Blue Origin LLC’s New Shepard rocket launcher for near-orbit flights. In October, the company made its seventh test flight from Van Horn, Texas. She plans to have another “partner” before she starts flying people.
The third competitor, Elon Musko’s Space Exploration Technologies Corp., plans to fly a four-person private crew at Axiom Space Inc. by the end of the year. The crew will visit the International Space Station for ten days as part of NASA’s efforts to boost commercial activity in near-Earth orbit.
Large problem
At a time when interest in smaller jets is growing, the market for twin-aisle jets produced by Airbus SE and Boeing Co. is “worse than pessimistic,” said Richard Aboulafia, an aerospace consultant. Even before the virus outbreak, sales were low and surplus models of used models would limit demand for many years.
Since long-haul flights are no longer available and there are no new reservations, Airbus and Boeing have extended the age limit for their large aircraft in the airline fleets. There are no encouraging signs. Boeing is clinging to orders for the largest jet on the market, the 777-9, which is at least a couple of years late. Analysts expect orders for both the best-selling Boeing 787 and the Airbus A350 to decline in the future.
According to Sasho Tusa, an analyst at Agency Partners, production of the less popular A330 could be reduced to one unit per month. Despite the upgrade, the plane received almost no new orders and the financial problem of the largest customer, AirAsia X, was the last straw. However, analysts predict that the program will continue to move slowly, only at a slower pace.
Weakest links
In 2019, when the air travel boom reached its zenith, major airlines began offering smaller and smaller addresses. Now, to control losses, they are abandoning all unprofitable routes. Fewer flights, smaller planes and reduced metropolitan connections threaten the economies of several tourism-dependent countries. According to the Grant of OAG, some decisions can take effect indefinitely.
Long-distance routes, which were still under development before the pandemic, are particularly vulnerable. Starting at the end of March, British Airways will permanently abandon 13 long-haul destinations in North America, the Middle East, South Africa and Asia. Cathay Pacific will close in seven countries around the world as losses continue to mount.
Cities like Manchester (England) will have to accept the weakening of ties with such important markets as China, and flights from Beijing to Lisbon, Barcelona and even Madrid could be threatened when airlines reconsider their need.
According to Grant, major Middle Eastern airlines such as Emirates and Qatar Airways, which thrive in flying around the world, are unlikely to fill the gaps. He says they are already serving as many places as they can, given the lack of connecting traffic: “They will likely try to return to pre-pandemic demand and capacity levels.”
Starter motor congestion
While launching new airlines during the industry’s worst recession may seem like a reckless decision, there is some logic here. Financing remains cheap and the pandemic has left a huge fleet of aircraft in hangars, many of them owned by leasing companies eager to find new operators.
Aircraft manufacturers are also looking for new buyers for their jets, especially the Boeing 737 Max, and the model is returning to the market after 20 months of inactivity. Existing operators have reduced their capacity and given up thousands of jobs, handing over hordes of experienced workers to future competitors, while high levels of debt limit their ability to compete. Among the new projects, we see Cyrus Capital looking to revitalize Britain’s Flybe after buying the brand from a manager.
The newly formed Emerald Airlines has won a contract to provide regional flights to Aer Lingus in Ireland. Oslo-based Flyr, which plans to launch in the coming months, is looking to take over Norwegian traffic, and the founders of PT Lion Mentari Airlines plan to establish a new company in Indonesia. In North America, Canadian Flair Airlines is looking to expand from three to fifty planes, renewing its brand and management, and in Miami, Global Crossing Airlines, whose planes bear the GlobalX logo, plans to contract charter flights to Latin America.
South African leasing company Global Airways on December 10. helped lift budget airline Lift with existing surplus aircraft, showing a possible new direction for financial companies with out-of-service aircraft.
A great new world
Just as long lines for inspections, shoe drying, and fluid restriction have influenced the air travel experience since the 9/11 attacks, Covid is likely to lead to more mask wearing programs, social isolation and passenger health. “When we look at all of this five to ten years from now, we will see a catalyst for many changes,” said John Strickland of JLS Consulting.
Passengers are likely to require companies to continue to maintain a high standard of hygiene, which could affect profitability. One of the key changes is the introduction of pre-flight Covid tests. Carriers have tried unsuccessfully for several months to take this step and ultimately encourage travel, until a new strain of the virus found in Britain has forced governments to change their minds.
France and other European countries are demanding screening of all UK passengers, and Scott Sunderman, the Collinson Group’s chief medical and safety officer, reports a surge in demand for testing at London Heathrow Airport after companies such as British Airways and Virgin Atlantic Airways Ltd. have introduced mandatory testing for all flights to the US, a policy that the US itself is considering for flights from abroad.
On the other hand, many airlines have given up on change fees, and getting a refund may now be easier in the face of outrage that cash-strapped airlines won’t refund flights for canceled flights. Long-term improvements are also likely to be made to the shipping and billing processes.
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