Airline Industry Welcomes Decision to Reopen Transatlantic Routes
The United States’ decision to lift restrictions on vaccinated travellers has brought a sigh of relief to the global airline sector, which has struggled immensely throughout the pandemic. The move, announced on September 20, is particularly significant for European carriers, with transatlantic routes being among the most profitable.
For airlines like Air France-KLM, which derives 40% of its revenue from North Atlantic flights, the news is especially positive. Lufthansa, too, relies heavily on transatlantic traffic, with around half of its revenue coming from long-haul flights. Air France-KLM CEO, Benjamin Smith, described the announcement as “formidable news” for the industry, which has faced massive financial losses during the past 18 months.
British Airways also celebrated the decision. CEO Sean Doyle called it an “historic moment,” emphasising that customers can now book with confidence, believing that the world is reopening to them. US-based carriers, such as United, Delta, and American Airlines, are less reliant on international routes, with only about 25%-30% of their revenue coming from abroad, but they too welcomed the announcement.
Industry groups have also expressed their support. Airlines for America, led by Nicholas Calio, labelled the decision a positive step towards recovery, and Airlines for Europe praised the move, highlighting its potential to boost transatlantic traffic, tourism, and reunite families. The International Air Transport Association (IATA), which represents 290 airlines globally, called the decision “a major step forward,” underlining the positive impact on both tourism and business travel.
However, while the decision marks a positive shift, recovery is expected to be slow. Analysts caution that even though European airlines are eager to resume flights across the Atlantic, they may not immediately increase their schedules, except on the busiest routes. George Dimitroff, an analyst at Ascend by Cirium, noted that the recovery of transatlantic traffic would take time, with more significant improvements likely occurring in March 2022 as airlines prepare for their summer schedules.
Additionally, the issue of profitability remains a concern. For airlines to be profitable, flights need to be at least 75%-80% full, and the need for passengers from both sides of the Atlantic is critical. While business travel is expected to recover gradually, analysts remain cautious about the overall impact of the pandemic’s trajectory and the role of virtual meetings in curbing business travel demand.
The lifting of the US travel ban has provided a glimmer of hope for the airline industry, but the full recovery of transatlantic routes may still be some way off.
