The airline industry has continued its run of bad luck, though some of its pain is self-inflicted.
Hot on the heels of long delays at Heathrow and Manchester airports is news that EasyJet has cancelled 100 flights and British Airways owner International Consolidated Airlines also unable to operate all of its scheduled flights.
These issues stem from airlines and airports having insufficient staff to cope with rising demand. A resurgence in Covid cases hasn’t helped, with many workers off sick.
The broader aviation sector has been waiting for the magic moment where flying restrictions were lifted, and individuals regained their confidence to get on a plane again. With both forces now in motion one would have thought businesses that enable and support the flying experience would be making hay while the sun shines. Unfortunately, the sector’s recovery is as chaotic as someone on their first flying lesson.
“Airlines have promised vouchers to compensate for any disruption, but this is the last thing they want to do, given that they are still trying to work their way through vouchers issued during the pandemic,” says AJ Bell investment director Russ Mould.
“News bulletins showing long queues of people waiting to get on planes will put many people off from jet-setting to a different location. Together these forces could result in tens of thousands of people saying they won’t bother with flying again this year, and best to wait until everything has settled down.
“If the current disruption continues into the Easter weekend, we could easily see airlines like EasyJet have to downgrade their earnings forecasts. Making matters worse is the fact that oil prices remain stubbornly high which is putting pressure on fuel costs. Ryanair is clearly concerned about the situation given how it has announced increased fuel hedging.
“The soaring price of fuel could weigh on corporate earnings in the airline sector unless extra costs are passed on to the customer. Doing so is a big risk given how consumers are under considerable pressure from the rising cost of living and may not be able to stomach higher ticket prices, but many airlines have significant debts which they are desperate to reduce so they will have to find ways to protect their margins.”
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