By Staff Correspondent
In a recent media interview, British Airways Chief Executive Sean Doyle shed light on the factors leading to the prolonged elevation of international airfares. Foremost among these are the global increase in fuel prices and inflation, both of which are exerting upward pressure on airlines’ operating costs.
Doyle underscores that the benchmarks of 2019, before the onslaught of the pandemic, are no longer valid reference points for the aviation industry in 2023. Inflation and fuel costs, both higher than 2019 levels, necessitate a reassessment of airfares to ensure the sustainability and profitability of airlines. With businesses across the board grappling with the inflationary environment, airlines, too, must account for these additional costs, potentially leading to higher fares for passengers.
However, determining airfares is a complex function of cost pass-through. Doyle identifies supply-demand dynamics, efficiency gains from modern, fuel-efficient aircraft, and enhancements in customer experience as critical elements in fare determination. In this context, British Airways strategically focuses on fuel-efficient aircraft to navigate the cost landscape while striving to improve the passenger experience.
As the aviation industry recovers from the pandemic-induced downturn, competition among airlines is expected to intensify, leading to competitive airfares. As airlines rebuild their networks, consumers will likely have many choices, ensuring a dynamic and competitive market.
In the context of the Indian market, British Airways has demonstrated a commitment to expansion and customer service. Recently, the airline inaugurated a new call centre in Gurugram with a workforce of approximately 1,400 staff. This centre is expected to enhance support for US, European, and Asia-Pacific passengers.
Moreover, British Airways is operating at 92% of its pre-pandemic capacity in 2023, an encouraging sign of recovery. Over the next two years, the airline aims to further build on this achievement, despite the industry-wide supply chain disruptions.
The airline’s growth strategy in India also involves exploring strategic alliances. Currently, in a codeshare partnership with Vistara, British Airways is open to other potential collaborations. It aims to leverage one-stop services across Europe and North America, confident of growing passenger traffic in the face of ambitious international expansion plans by Indian carriers like IndiGo and Air India.
Regarding viability, Doyle emphasises that financial discipline is crucial in running profitable businesses, especially in light of the debt accumulated during the pandemic. This includes managing costs and capacity and demonstrating agility in route planning.
As the aviation industry navigates through these significant transformations, airlines like British Airways adapt and strategies for a post-pandemic world. The challenges are numerous, but so are the opportunities, especially in high-growth markets like India. Despite the higher baseline costs, the industry appears poised for recovery and growth, attuned to the realities of the new normal.