Safety measures as crucial as attractive fares, perks for air travel to rebound

Singapore

WITH the road to recovery set to be a long one for air travel, airlines may have to dangle attractive fares to entice passengers back to the skies once they start adding capacity back into the market.

Given the dearth of travel demand, carriers will likely have to stimulate demand in the near term as well as ensure robust health and safety measures are in place to get travellers to bite, say market watchers.

"The broad feeling is that fares will initially be quite low as airlines attempt to rebuild their sold capacity for the next few months," reckons Mayur Patel, head of JAPAC for OAG Aviation. "However, we are unlikely to see incredibly cheap fares from many airlines since airfares are already very competitive and the margins for airlines are already low."

As such, legacy carriers are more likely to ease booking restrictions to offer travellers flexibility instead of dangling deeper discounts, Mr Patel said.

Some low-cost carriers "may offer some incredible fares" but will also be looking to cross-sell ancillary products, such as advanced seat assignments or priority boarding to travellers, who may be more amenable to such options in the current environment.

Pointing out that travel demand is low at this point, Alicia Seah, communications director for Dynasty Travel, said: "In an attempt to re-inspire confidence, airlines may implement numerous friendly strategies to get consumers back on planes with discounted and promotional fares."

This will change once demand rebounds, which may push airfares upwards given that airlines are likely to reintroduce capacity slowly, she added. On the other hand, if airlines have to implement social distancing measures and leave seats empty, the reduction in capacity may push ticket prices up sharply, cautions Elis Kodra, director (Asia-Pacific) at CWT Solutions Group.

For now, the International Air Transport Association (Iata) has opposed the idea of leaving middle seats empty on planes, warning it would either serve as a death knell for affordable travel or force airlines to go bust if they do not pass on the increased costs to the consumer.

The move essentially reduces the maximum load factor, making it harder for airlines to break even. Asia-Pacific fares would have to rise 54 per cent higher year-on-year to break even, Iata estimates.

Instead, the association is advocating for a comprehensive suite of measures to restart travel, including face masks onboard, temperature screening, limiting movement within the aircraft cabin, frequent and deeper cabin cleaning, as well as simpler meals onboard to reduce interaction between cabin crew and passengers.

For prospective travellers, a bigger prerequisite might well be precautionary measures, rather than promotional airfares, pointed out a spokesperson for travel agency Chan Brothers.

She added: "Attention needs to be paid to multi-pronged efforts to heighten precautionary measures to safeguard the health and well-being of travellers and employees."

As things currently stand, travellers considering a jaunt abroad might also be deterred by the prospect of having to serve a 14-day Stay-Home Notice period upon arriving back in Singapore.

Meanwhile, as of March 27, Singapore residents and long-term pass holders who disregard the prevailing travel advisories will be charged unsubsidised rates at public hospitals if admitted as suspected Covid-19 patients within two weeks of returning.

From June 2, Singapore will gradually allow travellers to transit through Changi Airport, the Civil Aviation Authority of Singapore (CAAS) said on Wednesday, as air transport is progressively reopened.

Precautionary measures will be put in place, such as ensuring transit passengers do not mix with other passengers at the airport. Singapore had closed its borders to short-term visitors - including transit traffic - starting 2359 hours on March 23 as it tightened border control measures in a bid to curb the pandemic.

Budget carrier Scoot this week announced it will be adding one weekly service to Guangzhou in June, as well as thrice-weekly flights to Kuching, Penang and Ipoh in Malaysia. However, its overall capacity cuts still stand at just under 98 per cent, vis-a-vis pre-pandemic levels.

In response to queries from The Business Times, a Singapore Airlines (SIA) spokesperson said it welcomed CAAS' decision, adding it is currently assessing the impact on the airline's operations before deciding on its next steps. Singapore's national carrier has been forced to make sweeping capacity cuts of 96 per cent in what has been described as aviation's biggest crisis to date.

Globally, domestic travel will return first, highlighted Mr Kodra, adding that it may take a longer time for capacity in Singapore to recover compared to other countries as it lacks a domestic market.

"We are seeing some encouraging signs in various parts of the world. With international travel, governments may initially open up borders to travellers from only some countries before easing restrictions more widely," he said.

Mr Patel said: "As Singapore eventually opens up its borders to kickstart tourism, this would initially likely include markets in a three- to four-hour flight radius which have stringent health and safety measures in place and which have made progress in containing the pandemic, such as Hong Kong, Taiwan and Macau."

According to data from OAG, under 4 per cent of historic capacity is being operated from Singapore presently. "The industry is expecting recovery to take anything up to three years in some markets and the consensus is that perhaps no more than 60 per cent of capacity will be back in operation by the end of the year," said Mr Patel.

Essential business travel should return first, although companies are also likely to reduce the number of employees who travel for work, said Ms Seah.

While Chan Brothers has received notices on some airlines planning to ramp up Singapore outbound flights from July, the viability of increased flight frequencies is dependent on entry restrictions and border closures for destination countries, in addition to Singapore's Public Health Travel Advisory, its spokesperson said.

According to figures from airport operator Changi Airport Group, passenger traffic at Changi Airport in April slumped 99.5 per cent year-on-year as airlines cancelled flights and grounded their planes.

Earlier this week, the government said that it is looking into the possibility of piloting green lane arrangements with select nations seen as at equivalent or lower risk of community transmission as Singapore, for which essential travel in limited numbers can be carried out with the necessary precautions.