{"id":123682,"date":"2021-05-04T13:17:45","date_gmt":"2021-05-04T13:17:45","guid":{"rendered":"https:\/\/precoinnews.com\/?p=123682"},"modified":"2021-05-04T13:17:45","modified_gmt":"2021-05-04T13:17:45","slug":"analysis-stricken-airlines-seek-lifeline-from-transatlantic-opening","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/analysis-stricken-airlines-seek-lifeline-from-transatlantic-opening\/","title":{"rendered":"Analysis-Stricken airlines seek lifeline from transatlantic opening"},"content":{"rendered":"
PARIS\/LONDON (Reuters) -Diplomatic moves to ease transatlantic air travel could unleash fierce competition to entice passengers back into near-empty cabins at a time when tottering airlines can ill afford a price war in the world\u2019s richest aviation market.<\/p> Talks between Brussels and Washington on resuming mass travel for vaccinated tourists have raised hopes of a summer rebound – further buoyed by new EU reopening proposals.<\/p>\n Airlines are desperate for good news after a year of COVID-19 lockdowns that pushed many to the brink of collapse, or into the arms of governments.<\/p>\n The United States will reopen to Europeans in \u201ca matter of the next two or three weeks\u201d, Lufthansa Chief Executive Carsten Spohr predicted last week.<\/p>\n But the German airline boss also cautioned against any race to the bottom on fares.<\/p>\n \u201cThe North Atlantic is historically the most disciplined traffic region,\u201d Spohr told investors. \u201cI expect this discipline (to) prevail.\u201d<\/p>\n United Airlines, American Airlines and Delta Air Lines have added summer routes to countries like Iceland and Greece that plan to welcome vaccinated travellers.<\/p>\n Consumers are showing some interest.<\/p>\n Air France-KLM said U.S. sales twitched back to life last month after French President Emmanuel Macron announced restrictions may be eased for vaccinated Americans – and again when the EU confirmed talks with Washington.<\/p>\n Air France is adding a Paris-Denver service, in what network chief Olivier Piette described as a \u201cbig bet\u201d on a secondary U.S. leisure route with less direct competition.<\/p>\n The Franco-Dutch group is partnered with Delta and Virgin Atlantic in one of three transatlantic joint-ventures that allow extensive commercial cooperation. Lufthansa is paired with United, and British Airways with American.<\/p>\n Virgin is expecting a scrap, Chief Executive Shai Weiss said recently. \u201cI\u2019m sure there\u2019s going to be tremendous competition and we\u2019ll rise to it.\u201d<\/p>\n But airlines bled dry by the crisis will resist aggressive discounting, predicts analyst John Grant of data specialist OAG.<\/p>\n \u201cThe bean counters will be keeping a close eye on that,\u201d he said. \u201cInvestors will also want to see airlines behaving responsibly in the recovery.\u201d<\/p>\n Airlines currently plan about 65% of pre-crisis transatlantic capacity in the third quarter, according to OAG – but many flights could end up cancelled.<\/p>\n Mid-sized Boeing 787s and Airbus A350s will be summer favourites, OAG expects, thanks to fuel efficiency and freight capacity. Grounded 747s and A380 superjumbos are unlikely to return so soon.<\/p>\n Summer bookings are just a fifth of their level at the same point in 2019, separate ForwardKeys data show.<\/p>\n Greece, which has been promising unfettered access for visitors with vaccines or negative tests, is so far the standout destination for U.S. tourists with sales at 74% of pre-crisis levels.<\/p>\n For Britons, Disney World remains a draw, with Orlando, Florida bookings down 52%, a relatively strong showing.<\/p>\n Airline network managers have suffered repeated false starts, with a shift to last-minute booking further obscuring recovery prospects.<\/p>\n American Airlines revenue chief Vasu Raja offered a \u201cdose of reality\u201d on summer traffic to Europe. \u201cA lot of the customers that would have gone there have already booked trips to Hawaii or Florida anyway,\u201d he told investors.<\/p>\n European carriers such as Virgin and British Airways have more at stake in the North Atlantic than U.S. peers cushioned by a rebounding domestic market. Hopes are high for a return to quarantine-free travel between Britain and the United States.<\/p>\n European airline shares rose on the latest EU reopening steps, with British Airways parent IAG up 2.5% on Tuesday as London trading resumed after a public holiday.<\/p>\n Geoffrey Weston, a consultant with Bain & Co., expects airlines to rein in revenue management software that typically sets fares to fill planes.<\/p>\n \u201cIn recovering markets there\u2019s more human intervention and control over pricing,\u201d Weston said, adding that Norwegian Air\u2019s transatlantic exit had also eased pressure.<\/p>\n Soaring cargo rates have allowed airlines to keep routes open with low passenger occupancy and may limit the competitive drive to slash fares as demand picks up.<\/p>\n Air France is serving 11 U.S. cities – increasing to 12 with Denver – with A350s, 787s and first class-equipped 777s whose freight loads largely cover the costs of running the flight.<\/p>\n \u201cIt\u2019s thanks to cargo that we\u2019ve been able to maintain our long-haul programme,\u201d said Piette.<\/p>\n \u201cIt\u2019s a good fit with current consumer behaviour.\u201d<\/p>\nDISNEY AND A DOSE OF REALITY<\/h2>\n