Following recent announcements made by several airlines, speculation has grown that some of the world’s largest airlines will shrink:
Nick Wyatt, Head of R&A and Travel & Tourism at GlobalData, a leading data and analytics company, offers his view on the situation:
Announcements made over the last week or so point in one direction: airlines will become smaller – at least in the short-to-mid-term.
Some high-profile names have come to the conclusion that a leaner, more agile business is what is needed to help them navigate the turbulence expected over the next two to three years.
COVID-19 has hit the airline industry harder than almost any other and this has caused an unprecedented number of issues for carriers. All major airlines are analysing their operations in a bid to survive as they burn through cash at an alarming rate.
This will mean that they assess route viability thoroughly and make decisions based upon the findings of such analysis. This could lead to issues with connectivity, but as the UK showed in the case in Flybe, there are limits to the value that governments place on this.
In Q1 results announcements, Delta CEO Ed Bastian and American Airlines CEO Doug Parker both warned that their respective airlines may well be smaller in the future and in a letter to staff, British Airways appeared to cast doubt over whether it will ever resume operations at Gatwick. It is unlikely that these will be the last such announcements.