After the struggling pandemic period of two years, 2022 is looking brighter for the global aviation industry. With pandemic prompting shut down, the international passenger demand in 2020 was 25% lesser than that of 2019, according to the data released by the International Air Transport Association.
The international and domestic routes have begun to reopen, and airlines have announced special ticket fare offers to lure passengers. Air travel is still an expensive affair for passengers as they need to spend for RT-PCR tests on arrivals across airports. According to an article published by Economic Times, all these special ticket fares, the low-cost tickets, are likely to be a limited affair.
Delta and Omicron variants of COVID-19 continue to create scare globally, which may become detrimental to the present relief of the global aviation industry.
Airlines need to return to viability, get back on their feet after debt-ridden days and meet the operational costs, soon forcing them to eliminate the cheap flight ticket sales. With the COVID-19 pandemic slowing down, the government may not extend the support for the airlines.
Model of Low-Cost Tickets, a Higher Number of Passengers May Not Survive for Long
The low tariff rates for flight tickets are based on the business strategy of gaining lower profits per passenger but flying a greater number of flyers. The airlines can also reduce fixed overheads by using larger-capacity aircraft. The business model needs planes full of passengers to make a profit.
The pre-COVID profit margin per flyer for airlines in 2019 on long-haul international return flights was about US$10.
There are chances that the airlines may stem into new businesses in 2022 for survival. The model of low-cost carriers is still a viable option, but the passengers should show consent to pay for ‘ancillaries’ such as extra luggage, snacks, hire a care service, etc.
Considering that the airlines require higher margins to survive to compensate the loss incurred during pandemic days, running on razor-thin margins does not look appealing. Lower passenger volumes at higher rates look like a better business model for airlines in the upcoming years.