Airlines restoring capacity in bid for recovery from worst health crisis in history
November 1, 2021 By Ross Marowits, The Canadian Press
TORONTO — Airlines are adding flights and capacity in the hope that passengers are eager to jump back onto flights after more than 18 long months of the COVID-19 pandemic.
“We’ve been going through the equivalent of about 11 years of historical growth over the past six months, so the growth has been really tremendous over a very, very short period of time,” says John Weatherill, chief commercial officer at WestJet.
After a near-grounding of flights, the Calgary-based airline expects to be at about 70 per cent its pre-COVID capacity by the end of December, fully restore its domestic business by next summer and see its international capacity fully return by the end of 2022.
Air Canada, with its larger network and increased service to international destinations and business travellers, is projecting that it will be back to where it was before the pandemic struck by 2023 or 2024.
“But those dates are very movable depending on how things develop over the next six months,” said Mark Galardo, senior vice-president of network planning and revenue management at Air Canada.
Future waves of COVID could upset these plans, although airlines expect a growing number of vaccinations will help to address any new health challenges.
“We’re feeling generally good that the worst is behind us,” he said in an interview.
Galardo said COVID has been an eye-opening experience that wiped out a decade of growth.
North American passenger demand was down 79 per cent in January 2021 compared with January 2019 with seat capacity off 60.5 per cent, according to the International Air Transport Association, the trade group representing airlines.
The situation has improved, but the number of scheduled domestic flights for the fourth quarter is still down 40 per cent and capacity is nearly 25 per cent lower than where it was before the pandemic, according to Cirium, the aviation data company.
The easing of travel restrictions and rising vaccination rates have allowed demand to improve but the aviation sector’s future “remains more uncertain than it has in decades,” says a report from Deloitte advocating reform in the Canadian aviation sector.
“The pandemic has completely upended the sector’s future,” the report said, noting it could take up to five years for air traffic in North America to return to pre-pandemic levels.
Garth Lund, chief commercial officer at Flair Airlines, says the recovery so far has been uneven. Low-cost airlines like Flair that are expanding their fleet will see a much faster recovery with these types of carriers increasing their market share globally from before the pandemic.
That’s because they mainly serve leisure travel which has seen pent-up demand. They’ve also parked fewer of their planes than legacy carriers, been able to secure newer planes and have used the pandemic to get better airport deals, recruit crews and catapult the growth of the business.
“The past 18 months or so, or even past six months was really a bit of a once in a lifetime opportunity for really catalyzing that growth,” Lund said.
For the industry as a whole, vaccinations for both passengers and employees are key.
“I think that helps people’s confidence to travel,” added Charles Duncan, president of Swoop, WestJet’s low-cost carrier.
However, business travel — which is Air Canada’s bread and butter and helps to offset lower leisure fares — could face a longer road back to normalcy as many big companies have postponed reopening their offices.
Galardo said that until business recovers, it will be betting even more on the leisure market that has been more resilient and is partly supported by multicultural communities travelling to visit families and relatives around the globe.
Westjet’s Weatherill said uncertainty around travel restrictions and testing requirements are contributing to passenger reluctance to purchase tickets.
Testing is expensive, especially the PCR test required to re-enter Canada. As vaccinations become available to children as young as five, the industry wants to see testing, which it views as the “last major logistical and economic hurdle to recovery” end in 2022.
“It’s also unnecessary in our view, and it’s in a world where effectively everyone who’s travelling is double vaccinated,” Weatherill said.
The hope is that an updated U.S. air passenger policy allowing vaccinated travellers to rely on rapid tests instead of PCR tests or use self-testing kits will be adopted by Canada.
“We would hope that Canada eventually sees the light (and end the PCR requirement),” said Robert Kokonis, president of airline consulting firm AirTrav Inc.
“Once we do that, I see demand further improving in the forward booking season, both for winter and for summer.”
The impending reopening of the U.S. border for Canadian travellers on Nov. 8 will also help to boost passenger confidence because there’s been confusion with air travel being permitted while the land border has been closed, added Lund.
“Adding more consistency between the two will just help people to have that confidence to to fly south.”
Meanwhile, a 120 per cent increase in fuel costs over the past year to the highest level since 2014 presents a challenge for all airlines, which are loathe to impose fuel surcharges.
“We haven’t had a domestic fuel surcharge at WestJet since 2008,” Duncan said.
“We do not intend to bring back a fuel surcharge and will work diligently to manage this increasing expense while maintaining low fares for Canadians, as we have consistently done over the last 13 years.”