Airlines try ultra-cheap fares to get the world flying again

The nightmare year of 2020 brought the airline industry’s first decade of sustained profitability to a shuddering halt. The coronavirus pandemic tore through in a tumultuous, unprecedented way, leaving carriers in a deep hole, along with a constellation of aerospace manufacturers, airports and leasing firms.

2021 is shaping up to be a transition year for an enterprise that takes passengers on the equivalent of 208 million annual trips around the globe. At best, the path ahead will be bumpy, with progress toward a return to travel dependent on the pace of vaccine roll-outs, access to capital, government policies and the unpredictability of a virus that’s not yet fully understood. Still, there will be leaps, including the first commercial flights to near-space.

Here are some developments to look for over the next 12 months.

Fare wars
Airline traffic won’t see a major boost until vaccines saturate enough of each country’s population to stamp down infection rates. Even then, it may take effort to get some people back on planes. In Europe, that’ll mean fares as low as 9.99 euros ($12.33), according to Ryanair Holdings Plc Chief Executive Officer Michael O’Leary.

Other ideas being floated to entice travelers are free hotel stays, 2-for-1 deals and complimentary travel insurance. Travel-pass promotions from carriers such as China Eastern Airlines Corp., which is offering unlimited flights for a single price, have proved popular and been extended into this year, while online agents show ultra-cheap trips in China for the Lunar New Year holiday next month. The key question is how long it’ll take to wean customers off those incentives.

An upturn in leisure and family travel should hit by midyear, depending on the region. More lucrative business traffic is likely to trail as companies resist sending people out on the road. John Grant, chief analyst at flight-bookings specialist OAG, says it won’t be a recovery until enticements are no longer needed and carriers can manage routes for profit.

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