Covid-19 regulations and customer demand will be key drivers of pricing for travel companies

As companies across the travel value chain start to consider what re-start plans and timing might look like, evaluating potential demand scenarios will be a critical input variable due to the cost of bringing expensive travel assets back online. 

As we work with companies to develop their re-start plans, the number of variables affecting these plans is large. For many of these variables, government guidance is still unclear, and assumptions need to be taken and refined as more information is made available. Key among them are the social distancing and hygiene guidelines that will be in effect, both of which will have major impacts on capacity and volume. For low cost airlines, filling less seats and increasing turnaround times will impact flight and passenger volumes (not to mention associated costs of adhering to these). The price of tickets to consumers will have to increase substantially to be able to operate profitably. 

Whether it is airlines, cruise companies, hotels or theme park operators, the costs of bringing travel and leisure assets online, coupled with the uncertainty over timing, demand, and staff availability, means that all companies in the travel value chain will need to build as much agility into their re-start plans as possible. Agility that allows companies to bring plans forward, or push them back, quickly and with minimal sunk cost, or lost opprtunity cost, will be a critical skill for operating profitably once the re-start is underway.