Start-up airlines want to take advantage of pent-up travel demand
In an absolutely catastrophic year, airlines lost billions of dollars and laid off thousands of employees. Imagine telling someone that you plan to open a new airline.
“People go,” Wow. what are you doing? Are you crazy? “” said Ravinder Minhas, a founding member of the upstart Canadian Jet Airways.
However, Minhas believes that now is the best time to open an airline in Canada.
He said: “This is the best time to enter the market when the situation seems to have deteriorated.”
Things will definitely go down.
Observation: The Minister of Transportation said that he is “very confident” in the Air Canada deal, which will increase employment:
In February, Air Canada’s outgoing president and CEO Calin Rovinescu called 2020 “the saddest year in the history of commercial aviation.” The airline lost $1.16 billion in the fourth quarter of 2020.
However, as the restrictions begin to be lifted and more normal times arrive, the aviation industry will gradually benefit. People have been trapped inside for more than a year.
After the pandemic broke out, millions of people lost their jobs. However, millions of people simply moved to work from home. They don’t travel, eat out, or commute to save money. CIBC said the family has saved a staggering $100 billion.
Now Canadians are planning to live on the other end of the crisis.
Amit Damadoran, an economist at the online travel site Hopper, said the number of bookings for travel agencies in the United States has increased significantly.
He said: “With the launch of the vaccine, we have seen a lot of pent-up demand begin to translate into more bookings in spring and summer.”
This is why entrepreneurs see opportunities.
The Wall Street Journal quoted an aircraft leasing company called Avalon Holdings, Say more than 90 airlines Launched this year.
‘Don’t miss the opportunity, don’t miss the opportunity’
There is Wizz Air in Abu Dhabi, Flyr in Norway, Flypop in the UK, and Ego Airlines in Italy. They are all trying to attract competitors and take advantage of the low cost of entering the industry.
Ian Lee, an associate professor at Carleton University’s Sprot School of Business, said: “Now or never.”
He said that the new airline did not have the heavy responsibility that traditional airlines had to undertake in the past year. There were no sunk costs, and no billions of dollars were lost. He said that during the crisis, the new carrier has been able to negotiate profitable deals.
He said: “Flights are cheaper.” He was referring to the take-off and landing fees charged by the airport to airlines. “Airplanes are cheap. Labor is cheap.”
Minhas said the new airline is ready to take advantage of this advantage. He also said that passengers are ready to flock back to the plane. Canada Jetlines will soon offer flights to destinations in the Sun at cheaper prices than traditional airlines, partly because they can achieve these discounts.
He said: “We can get the plane for a thousand pounds.”
Consumers are eager to experience
Minhas said that aircraft manufacturers found it more difficult to sell aircraft last year because most airlines had too many aircraft and not enough parking spaces.
But getting the equipment and license correctly is only part of the picture. The real problem revolves around demand. How fast will consumers flock to crowded airplanes?
The past year has been very cautious. How long will it take for this caution to disappear?
Li said that he has been reading what the experts say, claiming that everything will change.
He said: “I rejected this theory from the beginning.”
Lee said that there is always a clear gap between what we buy and what we do. The past year has made this gap even more apparent. Of course, consumers can buy countless things online. But what they miss most is experience.
No one knows when travel will thrive again
Therefore, as the pandemic restrictions fall, Lee predicts that consumers will flock to services that provide experiences.He said the tourism industry will be one of the biggest beneficiaries
Li said: “Air travel will explode.”
But, like everything else in the current economy, there are more questions than answers. In the last crisis, it seemed that all the crystal balls broke. The fact is that no one knows how and when the journey will start again. The International Air Transport Association expects that things will not fully normalize until 2024.
The aviation industry is one of the most competitive industries in the world. The success rate of new entrants in Canada is extremely low, because giants like Air Canada have swallowed their competitors one by one.
However, every upstart believes that this time will be different. From the beginning of the COVID case under control.
“We are starting to see this recovery,” Minhas said. “This will happen. We just need to persist and have more patience to get there.”