BusinessDay

Airfares may crash in summer as Boeing Max 8 returns, COVID-19 fears hover

Nigerians travelling to various countries for summer holidays this year may be paying less for airfare as airlines deploy more aircraft to various destinations with the return of Boeing Max 8. This will increase capacity of airlines than it was during the grounding of the aircraft type in 2019.

In addition, airlines are not seeing as much traffic for summer as they used to because of COVID-19, making them introduce incentives to attract passengers to fly again, one of which is low airfares on frequently visited destinations.

The Boeing Max 8 aircraft was grounded worldwide on March 13, 2019, after two crashes, one in Indonesia in 2018 and the other in Ethiopia in 2019, killing 346 people.

Apart from the human tragedy, it was a huge blow to Boeing’s business, since the company had thousands of 737 Max orders on its books. In addition to the flight control system at the centre of both investigations, other reports identified concerns with the airliner’s flight control computer, wiring and engines.

Airlines are now slowly adding the 737 Max back into their schedules. Southwest was the latest carrier to do so when it resumed flights March 11. The plane is now back in service with all US carriers and more carriers are expected to resume usage of the aircraft.

After the Federal Aviation Administration (FAA) in November 2020 cleared the Boeing 737 Max to return to service, other regulators – notably those in Brazil, Canada, Europe and the UK – have done likewise.

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In all, 13 carriers are now flying the 737 Max on commercial services. Cirium flight tracking data show that on March 5, operators carried out 280 revenue flights using the Max and that the in-service fleet had passed 100 aircraft.

Destinations where carriers have resumed usage of these aircraft and are currently flying to are destinations where Nigerians frequently visit, some of which are US, Canada and Paris. Airfares in and to these destinations are expected to crash.

Susan Akporiaye, national president, National Association of Nigeria Travel Agencies (NANTA), states that globally, there are many aircraft on ground, especially with the return of Boeing Max 8, but a lot of passengers may not be willing to fly the aircraft, while others may be apprehensive of travelling as a result of COVID-19.

“Airlines are not having as much volume as they would have had. As a result, airlines are not increasing fares for summer. If there was no COVID-19, the impact of the return of Boeing Max 8 would have been appreciated but a lot of people are still afraid to fly because of COVID-19,” Akporiaye says.

She acknowledges that ticket sales may be higher for July, which is summer as students are returning home, but traffic will still be low compared to the year 2019.

She says the thought of spending so much money on four to five COVID-19 tests for a return flight has continued to discourage passengers from travelling, noting that once the UK government relaxes the travel restrictions, there should be an increase in bookings to London.

Already, an economy class return ticket from London to Nigeria, which costs between N500,000 and N700,000 during summer now cost between N300,000 and N350,000.

World airlines had earlier announced full-year global passenger traffic results for 2020 showing that demand fell by 65.9 percent compared with the full year of 2019, by far the sharpest traffic decline in aviation history.

The airlines, under the aegis of International Air Transport Association (IATA), show that the sector has shown little signs of recovery with December 2020 total traffic put at 69.7 percent below the same month in 2019 – little improved from the 70.4 percent contraction in November. Capacity was down 56.7 percent and load factor fell 24.6 percentage points to 57.5 percent.

Bookings for future travel made in January 2021 were down 70 percent compared to a year ago, putting further pressure on airline cash positions and potentially impacting the timing of the expected recovery.

Ikechi Uko, aviation analyst, says there are fewer passengers for summer with available aircraft, noting that some airlines are pulling some of their aircraft out from service since passengers are not available.

Uko notes that the number of annual tourists’ visitation to Dubai reduced from 16 million in 2019 to 5 million in year 2020 as a result of COVID-19.

Dubai has stopped flights to certain destinations as a result of COVID-19, Uko states, adding that airlines that are operating may need to introduce incentives to lure passengers to travel again.

Travel may soon gain momentum, especially in countries with high-vaccination rates. These countries include UAE, Seychelles, Malta, San Marino, Bermuda, Israel, Jersey, Guernsey Mongolia, Chile, Isle of Man, UK, Anguilla and Curaçao, among others.

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