Point-to-point airlines will lead industry recovery, says GlobalData

Low-cost carriers will be well-positioned to lead post-COVID recovery

Point-to-point airlines will lead industry recovery, says GlobalData

May 25 - With an increasing desire from consumers to travel closer to home and budget constraints beginning to show, point-to-point airlines – especially low-cost carriers (LCCs) – will be well-positioned to lead post-COVID recovery, says GlobalData, a leading data and analytics company.

A GlobalData poll revealed that 43%* of respondents will consider taking a domestic trip in the next 12 months, and 27% will consider an international trip on the same continent.

Gus Gardner, Associate Travel and Tourism Analyst at GlobalData, comments: “Domestic travel and short-haul destinations are set to dominate in 2021 as travelers seek destinations that are closer to home. With substantial demand for short-haul flights, many travelers will be seeking the most direct option. Airlines with a robust domestic and short-haul network will benefit from an increase in demand. Furthermore, flying long-haul is often more costly. Some travelers will be looking to curb spending, and those operating short-haul, direct routes will win customers in the immediate recovery period.”

GlobalData’s latest consumer survey has revealed that many consumers are concerned about their financial situation with 87%** of respondents ‘extremely’, ‘quite’, or ‘somewhat’ concerned about this. Furthermore, 50% of respondents in the same survey ‘somewhat’, or ‘completely’ agreed that their household budget had reduced in the last year.

Gardner adds: “Many travelers will be looking to cut costs, and LCCs will likely benefit from this. Cost-cutting measures including streamlining operations and salary reductions will allow LCCs to push ticket prices to new lows to win over budget-conscious travelers that historically would have used full-service carriers.”

Legacy airlines will have the advantage of deploying higher capacity widebody aircraft onto short-haul routes in response to surges in demand. However, widebody aircraft are often configured for long-distance routes, with low-density seating not as well suited for short-haul flying. Moreover, the cost per seat will be higher for airlines opting for this strategy and will result in LCCs being in a stronger position.

Gardner concludes: “By flying directly as opposed to traveling via a hub airport, travelers will eliminate any unnecessary stops where they could inadvertently mix with passengers from around the world, which would notably increase the risk. With point-to-point carriers eliminating the unnecessary stopover and offering the quickest journey time, travelers will be more likely to pay extra to guarantee a perceivably higher level of safety.”