THE BEAUTIFUL SUMMER OF AIRLINES

August 20, 2022

From now on, we can draw the first conclusions of the summer 2022 season. And for once, they are particularly positive especially for airlines. While last spring forecasters advocated a slow restart probably based on the results of 2021, the opposite has happened.

?Why are this year's results so different from last year's? A priori, there is only one explanation: the mass vaccination of populations has led states to open their borders in a sustainable way, contrary to their previous policy. Certainly the number of infected with the now famous COVID has experienced serious surges, but this has not had serious consequences on the congestion of hospitals and especially it has not slowed down the demand for transport.

?And this situation is very interesting. Despite the smear campaigns for air transport against which there is still no coordinated response from the entire sector, customers have rushed on planes, so much so that the major airport infrastructures have been unable to ensure the fluidity of traffic. The need for travel, the desire to travel, the desire to regain this space of freedom, even at the cost of some difficulties, have been stronger than the injunctions of extremist environmentalists.

?So the airlines smiled again and it was not a luxury after two years of pure disaster. The financial results are there. Profits in the second quarter are even in many cases higher than those of 2019, the last reference year, which still reflected a continuous growth of 5% per year for a quarter of a century. This is timely to save from bankruptcy many carriers with little or no support from states themselves plunged into unspeakable difficulties. It started with the American carriers who left a little earlier by taking advantage of a very powerful domestic traffic. More interesting was the European recovery, which is essentially based on international networks and which, therefore, presupposed the coordinated opening of borders. After some trial and error, the European countries reached an agreement in the spring in a lasting way. It didn't take more for bookings to soar , despite the price increases.

?Because that's another piece of good news. The race for volumes seems to have stopped and tariffs are returning to common sense. Economic results are largely driven by revenue rather than passenger numbers. It is finally possible that air transport will return to a fare display that reflects the reality of costs, contrary to what we have seen over the past twenty years. There was an urgent need for consumers to be aware that air transport is an extremely complex activity and that the price must be paid. It is still necessary that the airlines stop these so-called "promotional" posters stupid but which put in the head of the public that air transport is no longer worth anything. In this regard, I would like to welcome the initiative taken by the ERA (European Regions Airline Association), which brings together some thirty airlines. Director-General Montserrat Barriga sent a letter to the European Commission on 21St July strongly protesting against the pricing practices of selling tickets below their cost price?, asking the Commission to act to put an end to these methods, including through the courts. We expect IATA to do the same on its side.

?In short, apart from some serious difficulties encountered by customers at some airports, the biggest, it must be said, the summer of 2022 will remain as that of the return of air transport to its fundamentals.

And now what can we expect for the next few months? ?Let us be a little optimistic. First, the Asian market, which has largely come to a standstill since the beginning of the pandemic, is gradually regaining its colours. When we know its importance, we can only imagine how much it will support many carriers very dependent on this clientele. And then the Russian and Ukrainian markets will reopen one day or another. They account for at least 10% of global traffic. Finally, and this is the icing on the cake, contrary to pessimistic forecasts, business traffic has also recovered, and it will not be a flash in the pan. ?So we can be confident for the last part of the year.

?The summer of 2022 has been very good for the airlines, and that's fine.