EasyJet’s cost-cutting may be misguided
International arrivals expected to return to 2019 levels by 2021
Following easyJet’s announcement that it plans to reduce its fleet, staff and operational costs amid the COVID-19 crisis, industry experts explained that with travel in Europe almost at a standstill, trimming costs is a necessity in the short term.
However, easyJet’s latest announcement stems from management’s belief that travel demand will not return to pre-COVID levels until 2023.There is an element of risk here because demand could return sooner than that. According to GlobalData’s forecasts, the number of international arrivals should reach 2019 levels as early as 2021.
This can be seen as a slightly risky bet for the airline considering that consumer confidence is returning as the crisis is slowly coming to an end and that a potential ‘travel itch’ from Europeans following months of lockdown should not be ignored.
Indeed, it will be essential for airlines, and even more particularly for those that are planning to be ready to fly for peak season like easyJet, to be fully operational as quickly as possible.
The pandemic will deeply modify the way we see travel and people are expected to be more health conscious. Similarly, a post-COVID-19 economic recession is looming and it could have a significant impact on travel and tourism. But all this is unlikely to fully deter travelers.
In a difficult economic context, low-cost airlines are the best equipped to make it out relatively safe. As such, easyJet can only hope that its decision to reduce its fleet and its workforce will not impede its recovery.