Logistics

Domestic air travel leads airline recovery: Boeing

K Giriprakash September 19 | Updated on September 19, 2021

Low-cost carriers aid market with point-to-point structure and affordable rates

The Commercial Market Report from Boeing released last week, has said there are already significant signs of industry recovery post-pandemic.

It predicts approximately a $9 trillion market for its products and services over the next 10 years.

Pre-pandemic, Boeing’s estimate was for an $8.7 trillion market in 2019, and the forecast was cut to $8.5 trillion in 2020 due to the global pandemic.

The Commercial Market Outlook CMO 2021 shows the global forecast is playing out largely as Boeing projected in 2020: demand for domestic air travel is leading the recovery, with intra-regional markets expected to follow as health and travel restrictions ease, followed by long-haul travel’s return to pre-pandemic levels by 2023 to 2024. These disruptions in traffic have a marked impact on aeroplane deliveries and the in-service fleet.

Low-cost airlines

Historically, low-cost carriers have led air service recovery out of market downturns, as their point-to-point structure allows quick market entry, and the lower-cost service they provide is particularly appealing.

“We expect this recovery to follow that same historical pattern. Network airline recoveries typically lag low-cost carriers, as the long-haul and premium traffic segments typically recover a bit later,” the Boeing report said.

The report makes a very significant point: It said as airlines emerge from the pandemic, we anticipate some current network trends to persist in the short and medium-term, but pre-pandemic drivers and trends are expected to prevail in the longer term.

Low-cost carriers will continue adding and removing routes at a fast pace, and generally emerge more quickly due to the earlier recovery of domestic, regional and leisure travel that their business model typically targets.

Network carriers, which provide high connectivity via hub-and-spoke operations, will resume and rebuild their networks as long-haul travel returns to pre-pandemic levels. Regardless of the airline network structure, airlines will shape their fleet strategies to build network flexibility, maximising capability while minimising risk and cost, and improving efficiency and sustainability.

The report also said the airline industry has reduced fuel consumption by half over the last 25 years in terms of traffic carried, measured in revenue passenger kilometres.

Published on September 19, 2021

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