Current issues facing the aviation industry in the UK

The aviation sector has had a very difficult few years. Entry bans and travel restrictions brought much of the industry to a halt in 2020 and 2021. Although this has now eased, things remain tough for airlines and other operators. Significant disruption remains in the UK – this article takes a look at the leading causes.

Ongoing COVID concerns

The impact is not as serious as it was, but COVID remains a major lingering issue. Restrictions (at least in most regions outside Asia) have been largely lifted, and vaccinated travellers are now keen and able to travel. With changed policies and testing, mass staff absences due to COVID are less of an issue too.

However, the industry cannot ignore the huge impact that COVID-19 has had and the risk that this could happen again. There have already been several new concerning virus variants. The last one led to rapid and severe border closures almost immediately. Operators rightly need to keep in mind the possibilities of further disruption, making long-term planning, scheduling, and budgeting particularly difficult.

There is also the likelihood that support in the future will be very different. During the last shutdowns, airlines (and other companies) were supported with grants, loans, and government furlough schemes. There were also government-funded repatriation flights for stranded travellers. How much – if any – of this would be offered again in uncertain, as COVID is now a “known entity.”

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Rising pricing and high fuel prices

2022 has seen major price increases in the UK. In April 2022, inflation was at 9% and expected to increase further. Airlines and other operators are experiencing higher costs in many areas – from catering supplies to airport fees.

Rising fuel prices, though, is an area that will have a big impact. In 2022, fuel is expected to account for over 19% of total airline expenditure. Oil prices hit a 13-year high in March 2022 (largely due to logistics issues as well as conflict in Eastern Europe). This has since eased back, but tensions remain.

Labour shortages and staff dissatisfaction

Nobody in the UK can have missed the challenges of the current labour shortages. This affects many industries – but hospitality and aviation are particularly badly hit.

Several factors are contributing to the labour shortage and difficulty recruiting. Firstly, travel volume has rebounded quickly – much quicker than many thought it would. In May 2022, global aviation traffic was up 83.1% compared to the year before (and back to almost 70% of pre-pandemic levels). In Europe (including the UK), the increase is even more pronounced – with traffic up over 450% in the year. With staff laid off during the pandemic, getting them back, trained, and security cleared quickly is proving a challenge.

Coupled with this, though, staff are reluctant to return to the industry. Many were poorly looked after during the pandemic and are attracted by the stability of other sectors. Pay remains low in many areas, and most operators are reluctant to increase this given their financial position and uncertainty. This is affecting current staff, too, with dissatisfaction evident in several strike threats and actions in 2022.

Brexit has also caused issues, with the loss of many European workers – key to many parts of the industry. There has been pressure on the government to change immigration rules for the sector, but this does not seem likely. In any case, attempts to do so in other sectors were far from successful.

It is not just airlines that are struggling. Airports and ground services are similarly affected. At many airports (including London Heathrow), the lack of ground staff has been a major factor in airlines cancelling flights. Likewise, extreme queues at immigration and security checkpoints can be blamed on the same. From early summer, Heathrow airport has been attempting to limit passenger capacity further but is understandably meeting resistance from airlines. This is a whole new area of airport/airline relationships that has not been an issue before.

Just looking at British Airways’ actions so far in 2022 shows the impact of this well. Over one week at Easter, for example, the airline cancelled an incredible 662 flights (according to Reuters). This has continued since, with a 10% cut to the summer schedule announced in April and further major cuts in June and July. The disruption for passengers is huge, and the impact on fares and flight availability is very punishing for travellers.

Changing passenger demographics and trends

All operators are having to face longer-term changes in passenger habits. A large part of this, of course, stems from the impact of COVID. There are other changes too, with the rising prices and cost of living. As passengers and companies look to further reduce spending, unnecessary travel will no doubt be cut.

One of the most significant shifts is from business to leisure travel. Business travel was put almost completely on hold during the pandemic and is proving the slowest to return. It is likely to return very differently as many companies continue to enjoy the cost saving, convenience, and lower risk of minimal employee travel. Add in companies’ policy shift and commitment to be greener and environmentally friendly, and it is likely business travel will never look the same again.

This is going to have a big impact on established airline economics. Legacy airlines that rely on filling lucrative business and first class cabins will need to rethink pricing models. We are already seeing this with fare changes and unbundling of business class benefits with some airlines.

Continued shift to private aviation

Post-pandemic, there was a shift from many travellers to private flying. This trend is likely to continue, given the ongoing problems in the industry. The benefits of flexible and reliable schedules minimised airport connections, and personal space became even more desirable in the new environment of disrupted flights and health concerns. By mid-2021, the US, for example, was seeing its highest ever private jet use. The sector is expected to emerge up 10% globally from pre-pandemic levels.

Speaking at the Farnborough International Airshow in the UK in July 2022, Scott Neal, senior vice president of sales for Gulfstream, explained this growth well. He said, “We have seen very robust, significant activity for about the last 18 months that’s continuing here into the third quarter. So, really a record sales run for us.” Much of the purchasing demand, he explained, is from first-time buyers.

Final Thoughts

There are certainly some difficulties in aviation at the moment – for both operators and passengers. The main problems are not short-term either, and no one expects them to be resolved quickly. Longer term, the industry, and travellers will adapt, but higher fares, more use of private aviation, and changed operator/airport relationships are likely to remain.

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