Budget carriers seen to lead in post-pandemic recovery

Louise Maureen Simeon (The Philippine Star) - February 26, 2021 - 12:00am

MANILA, Philippines — Low-cost carriers (LCCs) will lead the post-COVID recovery in the aviation industry on successful cost-cutting measures, according to a leading data and analytics company.

GlobalData of UK said LCC’s cost-containment measures and operational responsiveness would allow carriers to move quickly to absorb pent-up demand and capitalize on any opportunities ahead of other high-cost model airlines.

The tourism and aviation industries have been heavily hit by the COVID-19 pandemic and measures taken to curb its spread.

While some countries have slowly eased restrictions with the arrival of vaccines, travel is not expected to fully return to pre-pandemic levels.

In the Philippines, even domestic tourism cannot fully take off just yet as quarantine restrictions remain in place.

Based on GlobalData’s latest survey, a high of 87 percent of respondents globally are concerned about their personal financial position but LCCs’ low fares are well-positioned to meet such concern.

GlobalData analyst Gus Gardner said while all airlines have drastically reduced costs to survive, LCCs managed to push already low-cost bases even lower.

“These carriers can now operate cash-positive routes with a lower load factor than before, which is incredibly important with the current low levels of demand,” Gardner said.

He said the low fares offered by LCCs would better cater to the increased need for affordability.

Cost-cutting measures will allow LCCs to push ticket prices to new lows if necessary and still break-even, leaving other carriers at the risk of flying unprofitably if they choose to compete,” Gardner said.

“With leisure travel most likely to rebound first and LCC’s short distance, point-to-point networks will better suit pandemic-cautious travelers looking for trips closer to home,” he said.

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