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Ryanair Thinks the Airline Industry Will See a Quick Recovery in Demand Thanks to a Price War

Ryanair Thinks the Airline Industry Will See a Quick Recovery in Demand Thanks to a Price War

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Ryanair’s often outspoken chief executive, Michael O’Leary has said he thinks the airline industry will experience a quick recovery after the initial COVID-19 crisis passes thanks to an intense price war that will stretch into 2021. But while O’Leary believes airlines will reap the benefits from a rapid return in passenger numbers, many carriers will face pain from “massive price-dumping”.

“When this thing is over there is going to be such massive discounting going on that there will be a large spike upward in travel and tourism for a period of time,” O’Leary told Reuters in an interview on Thursday.

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As for when pricing might recover, O’Leary suggested that might not come until 2021 but that airlines might still be able to benefit from lower fuel prices. “I think 2021 has every prospect of being a bumper year in terms of earnings. Prices will be lower, but oil prices will be lower. There will be much more incentives at airports for growth,” O’Leary explained.

In mid-March, the Irish discounters boss said he hoped a “return to normality” would come about “sooner rather than later” because of the unpreceded action being taken by EU governments to stem the spread of the novel Coronavirus. Since then, however, Ryanair has grounded the vast majority of its fleet and is only operating a handful of flights on key routes, mostly at the request of various governments.

Last month, passenger traffic plummeted by almost half and April is set to be significantly worse. But those grim figures haven’t put O’Leary off future growth plans and has hinted at placing a new order for Boeing’s troubled 737MAX, saying he had heard “more optimistic noises” from the aircraft manufacturer over efforts to get the aircraft recertified.

Yesterday, the low-cost carrier easyJet said bookings for winter flights were “well ahead” on figures for the same time in 2019, suggesting the airline is also expecting a surge in demand once the Coronavirus restrictions end. When commercial flights might restart, however, is a question that easyJet isn’t yet willing to answer.

Instead, the Luton-based airline claimed it would be able to ramp up operations within two weeks of being given the green light to resume normal operations.

Other airlines, including the likes of Lufthansa, have been far less optimistic about the future state of the aviation industry, estimating that traffic demand might not recover to pre-Coronavirus levels until 2022. The same sentiment has been shared by the likes of United Airlines.

The International Air Transport Association (IATA) said on Tuesday that full-year travel demand will be down nearly 50 per cent compared to 2019 and that the likelihood of a deep global recession will suppress demand for some time. Severe domestic flight restrictions will continue for three months claims IATA, while “some restrictions” on international flights will continue for some time longer.

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