The countdown of the boom in “revenge travel” is on, which will force prices down. Some airlines are already preparing for this by reducing ticket prices to fill the empty seats.
But what are revenge trips? It’s a paradoxical term given to travel after the pandemic. This term originated from the equally paradoxical lockdown condition that banned travel. Revenge is not directed at the traveller or the destination, but at Covid himself and the oppression he brought about. So, this condition that launched travel in the post-pandemic period is now on the decline, according to a report by the FT.
Changing airline tactics
While airlines such as Ryanair and Emirates reported record profits last year, the former shocked European airlines on Monday when it warned that airfares would be “significantly lower” in the summer months, after falling 15% year-on-year in the spring.
Passengers are resisting high prices
Ryanair chief executive Michael O’Leary said Europe’s largest airline by passenger numbers was facing weaker-than-expected consumer spending and that recent efforts to raise fares had “met with resistance” from passengers. “Consumers are only willing to travel for a certain price.” Ryanair expects fares in the main summer period to be “significantly lower” than its previous estimate of “stable to slightly higher”.
Many carriers have been forced to reduce ticket prices to fill aircraft in recent months. In short, there is a sharp shift from the period after the end of the pandemic lockdown, when passengers were desperate to travel and the industry suffered from a shortage of aircraft.
“Customers are going back to basics,” Güliz Öztürk, chief executive of Turkish airline Pegasus, said at the Farnborough Airshow this week, adding that the industry should prepare for a period of “normalisation” as the post-pandemic “revenge travel” phenomenon winds down. Air India CEO Campbell Wilson agreed that demand patterns “will always normalise” after the “glaring imbalance between supply and demand post-Covid”.
Easy Jet wins
EasyJet, on the other hand, announced a sharp increase in profits and that ticket prices will be stable this summer. This means that difficulty has not knocked on the door of all companies. But such is Ryanair’s dominance of the European market – it operates around twice as many flights as EasyJet – that analysts have warned that the Irish carrier’s big discounts are likely to force others in the short-haul market to follow suit.
Shortly before Ryanair’s bell, Lufthansa had rung the bell with an announcement. It said it would struggle to make ends meet this year amid pressure on yields, a measure of average ticket prices that takes into account the number of passengers and distance travelled.
Reducing prices to fill the planes
North American airlines are following the same path and have reduced prices to fill their planes after offering too many seats on the domestic market this summer.
Andrew Nocella, United Airlines’ chief commercial officer, told investors last week that while demand was strong, “capacity growth was so significant that it put pressure on yield.”
The biggest impacts
Where the impact was most apparent was in the short-haul market in Europe and the US and in economy class, with longer journeys and more expensive flights in business or first class being less affected. Christian Scherer, chief executive of the commercial aircraft division of Airbus, the world’s largest aircraft manufacturer, acknowledged that the company has seen “some signs of declining yields” but stressed that it is “too early to say whether it is a slowdown, whether it is occasional or structural”. This trend in terms of airline tickets is expected to affect the accommodation sector as well. Travelers this year are more price-sensitive and the pricing strategy followed by the hospitality industry should be carefully planned.
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