Introducing social-distancing measures in the aviation sector could see seat capacities reduce by 38 per cent and airfare increase by 43 per cent for airlines in Africa and the Middle East if they are to remain viable, warns the International Air Transport Association.
In its analysis of airfares once travel restrictions ease, the international airlines lobby sees a scenario where airlines will be caught between low demand, excess capacity and low fuel prices. This should translate to lower fares, but proposed social distancing measures that will require the middle seat be left unoccupied as well as an increase in turnaround times because of sanitisation procedures will push unit costs up, making an increase in airfares necessary.
If airlines don’t increase ticket prices, many will fold, IATA chief economist Brian Pearce said in a briefing last week.
The measures sharply reduce the maximum load factor to 62 per cent, which is below the average industry break-even load factor of 77 per cent. With fewer seats to sell, unit costs would rise sharply, translating into fare increases of between 43-54 per cent compared with 2019, depending on the region.
“Airlines are fighting for their survival. Eliminating the middle seat will raise costs. If that can be offset with higher fares, the era of affordable travel will come to an end. On the other hand, if airlines can’t recoup the costs in higher fares, airlines will go bust. Neither is a good option when the world will need strong connectivity to help kick-start the recovery from Covid-19’s economic devastation,” says IATA’s director-general and chief executive Alexandre de Juniac.
The estimates in fare increases are based on the assumption that airlines will only have 85 per cent available seats occupied. That would translate into a load factors of 53 per cent of the 62 per cent weighted average of seats that will be available after when the middle seat is not occupied.
Airlines in Africa, North America and the Middle East required a load factor of 75 per cent to break even in 2019. That translated into an average fare of $181 in the Middle East and Africa, and $202 in North America. In Africa, fares would rise to $259 and $289 in North America, a 43 per cent increase in both cases. Comparable figures would be a 45 per cent increase fare in North Asia, 49 per cent in Europe, 50 per cent in Latin America, and 54 per cent Asia Pacific.