Your weekly travel and aviation Quote-a

13 May, 2022

At a time of crisis, it is important that we share our insights and experience, helping each other to contain and mitigate the impact of COVID-19. CTC – Corporate Travel Community each week brings you a roundup of the most thought-provoking and interesting comments from those industry leaders in the know.

Cathay Pacific chairman says Hong Kong 'falling behind' as the rest of the world reopens

Cathay Pacific chairman Patrick Healy stated Hong Kong is "falling behind" as the rest of the world reopens from the COVID-19 pandemic. He noted that Cathay has been operating at below 2% of passenger capacity through Mar-2022, which has had "material impact" on profitability in the first months of 2022. He also said it was Cathay's job to prove IATA director general Willie Walsh's comment that Hong Kong had ceased to function as an international aviation hub wrong by "staging a recovery to the best of our ability".

Flight Centre Travel Group CEO: Europe travel to 'be more expensive than pre-COVID'

Flight Centre Travel Group CEO Graham Turner said travel to Europe from Australia will "be more expensive than pre-COVID, probably about 20-25 per cent more expensive". Mr Turner said the company is operating at approximately half of its pre-coronavirus staffing levels of 21,000 employees, adding: "We're back to 60 or 70 per cent of the pre COVID traffic so there's a lot of pressure on our people, our frontline people, which is one of the things that is a worry for us".

Lufthansa Group CEO: Return to pre-pandemic capacity levels may occur 'earlier than planned'

Lufthansa Group CEO Carsten Spohr stated it may return to pre-pandemic capacity levels "earlier than planned". Mr Spohr added earlier predictions that capacity would not return to pre-pandemic levels before the middle of the decade "may prove too conservative" in view of the current strong demand. The group expects average annual passenger airline capacity of around 75% for 2022, and forecasts an annual offer of 95% of pre pandemic capacity as early as 2023. Mr Spohr outlined business travel is currently 50% of the pre pandemic volume, but is expected to rise to 70% by the end of 2022, with the desire for face to face interactions in the segment "growing noticeably".

Vistara CEO: 'If we did have the aircraft, Europe would definitely be a focus point'

Vistara CEO Vinod Kannan reported the airline's international network comprises 10 destinations at present, with "London being the crown jewel". Mr Kannan said Vistara is "very, very happy with" its Delhi-London Heathrow service, noting "the load factors are very strong", averaging more than 80%, "and the front-end cabins are well subscribed". He continued: "If we did have the aircraft, Europe would definitely be a focus point, probably with a second London-Delhi [daily frequency] if we get the slots, and Paris and Frankfurt would go up to daily", adding "the US is a sector we would look at further down the line".

Delta Air Lines CEO reports return of domestic business travel revenue

Delta Air Lines CEO Ed Bastian reported domestic business travel revenue "is back". Mr Bastian attributed the recovery in demand to COVID-19 rendering people "stir crazy", not only in the US but in Japan and South Korea in particular. Mr Bastian added Delta Air Lines is not only aiming to restore pre-pandemic operations and revenue, including business travel, but is also "trying to get better".

Air France-KLM CEO states 'recovery is here' following 1Q2022 results

Air France-KLM CEO Benjamin Smith stated the group's 1Q2022 performance confirms "recovery is here", noting encouraging increases in corporate and premium traffic complemented the leisure and VFR markets. Mr Smith added the performance was positive despite the challenge of Omicron, Russia-Ukraine conflict, and increased fuel prices. Quarterly yield was above 2019 levels, attributed to a quick implementation of fare adjustments on all its long haul flights. The group recorded a 1Q2022 revenue result of EUR4445 million (+105.7% year-on-year), which it stated was driven by a strong performance on Caribbean and Indian Ocean, Africa and South America.

Thai Lion Air CEO reports 'several' uncertainties preventing carrier from developing expansion plans

Thai Lion Air CEO Aswin Yangkirativorn stated there are "several uncertainties" preventing the carrier from developing expansion plans, including whether there will be a resurgence in COVID-19 cases. Mr Yangkirativorn added despite current signs of air travel demand recovery, Lion Air remains pragmatic about "strenuously rebuilding" the airline back to pre-pandemic levels. Mr Yangkirativorn noted air traffic demand is "very unlikely" to recover strongly and quickly.

IAG CEO: Group to return to profitability in 2Q2022

IAG CEO Luis Gallego projected the group expects to be profitable from 2Q2022 onward and remain profitable for the remainder of 2022. As previously reported by CAPA, the group recorded a net loss of EUR810 million in 1Q2022 and expects to reach 90% of 2019 passenger capacity levels by 4Q2022. Mr Gallego added: "Premium leisure continues to be the strongest performing segment and business travel is at its highest level since the start of the pandemic".

CemAir CEO reports 'sustained recovery' in South Africa

CemAir CEO Miles van der Molen reported a "sustained recovery" in the South African market since Aug-2021, noting that domestic travellers "seem to be more resilient". Mr van der Molen said total domestic traffic has recovered to approximately 65% to 77% of pre-COVID-19 levels, which he described as "fairly good" considering the reduction in capacity resulting from the suspension of SA Express and Mango operations and the restructuring of South African Airways and Comair (South Africa).

Firefly CEO: Domestic passenger market to recover to 70% of pre-pandemic levels by end of 2022

Firefly CEO Philip See forecast its domestic passenger market to recover to 70% of pre-pandemic levels by the end of 2022. Mr See added current recovery levels are "encouraging", with the potential for a full market recovery in 2023.

Sun Country Airlines CEO: Spirit Airlines merger will result in 'more rational pricing'

Sun Country Airlines CEO Jude Bricker stated a merger between Spirit Airlines and either Frontier Airlines or JetBlue Airways will result in "more rational pricing". Mr Bricker said a merger will result in a "net positive" outcome for the US low-cost market, adding it will benefit consumers, staff, and investors. Mr Bricker stated Sun Country supports a Spirit Airlines merger, whether it be with Frontier or JetBlue, adding the carrier hopes it closes by the end of 2022. Meanwhile, Sun Country aims to remain independent. Mr Bricker added the carrier "can't be acquisitive" due to its size, and the carrier has got "a really good thing going that focuses just on execution".

SMBC Aviation Capital CEO: Cost management to be the biggest challenge for airline industry

SMBC Aviation Capital Peter Barrett predicted cost management will be the biggest challenge for the airline industry over the next 12 to 24 months. Mr Barrett said: "If I had to pick one topic that's going to be a challenge for the industry over the next 24 months, it will be the cost base and how elastic will demand be relative to that".

South Africa's Tourism Minister: Reducing carbon emissions 'vitally important'

South Africa's Tourism Minister Lindiwe Sisulu stated the country's tourism sector continues to be "resilient" despite undergoing difficult circumstances. Ms Sisulu said: "We must be cognisant that we are experiencing warning signs of climate change, therefore our sector must be part of the united global response to the challenge of reducing carbon emissions". He added: "Practicing tourism that minimises carbon footprints, conserves energy and water, reduces waste and plastic consumption and ensures that fair benefits accrue to communities and employees, is not just an option - it is vitally important".

Mesa Air Group CEO reports high pilot attrition has resulted in carrier unable to operate profitably

Mesa Air Group chairman and CEO Jonathan Ornstein, via the carrier's 2Q2022 earnings call, stated the carrier's current pilot attrition rates, in addition to its hiring and training capacity, has resulted in the carrier's inability to generate sufficient block hours to operate profitably under existing agreements. Mr Ornstein added the carrier is working to mitigate the issue by increasing pilot retention, cost efficiency, and training capacity, noting current attrition levels have created "significant" backlogs in Mesa's training schedules.