Air ticket rates from UAE start to drop after repatriation rush - but will demand return fast enough?

Dubai: The repatriation rush out of the UAE is winding down… and this is showing up in ticket rates on all the major routes. Airlines will be hoping that this too will help convince passengers to return, if not now by at least mid-November and thereafter.

One can book a flight to Mumbai at Dh400 next week, as against the Dh650 and over that was the average during August. Seats on Karachi and Lahore bound flights are at Dh800 by next week and a steep drop from Dh1,400 or so in August.

Tickets to the Philippines have nearly halved to Dh1,370 as more airlines shuttle between Dubai and Manila. As part of a promotion, Cebu Pacific briefly offered a basic fare of Dh300 as recently last month.

However, demand to fly to the Philippines has been stifled by pandemic-related restrictions. Until recently, only Filipino nationals and foreign diplomats were allowed into the country. Returning from Philippines to UAE the requires passengers to get multiple approvals.

While the Asian sectors are seeing the sharpest corrections on rates, on routes such as Dubai-London, fare have either stabilized (at Dh2,000) or dropped marginally.

Will these be enough?

“The reluctance to fly is one thing - having to quarantine at your destination is another,” said Saj Ahmad, Chief Analyst at StrategicAero Research. “People aren’t prepared to take that risk - or run the risk of not getting their money back if they have to alter their travel plans.

“Since many have lost their jobs, that same demand pool of would-be flyers simply don’t exist any longer. Those who choose to fly do so out of necessity - not want.”

But even if a sizeable number of those wanting to fly out of necessity show up at UAE airports, that’s still a positive as far as airlines are concerned. Emirates keeps adding more routes on its return-to-normalcy push, while the UAE’s newest airline, Air Arabia Abu Dhabi, will add a second destination to Bangladesh from October 11.

The strategy is clear… get back into the air on those sectors most likely to feed into demand. It could be even better if some uniform requirements on safety protocols are followed by all governments, according to IATA (International Air Transport Association).

The grouping has called for systematic testing of passengers before departure instead of the current quarantine at destination requirement. “This should enable governments to safely open borders without quarantine," said Alexandre de Juniac, IATA's CEO, during a conference call.

"It will provide passengers with the certainty that they can travel without having to worry about last minute change in government rules.”

More fare cuts

If that doesn’t change, expect more fare cuts… even during the end-of-year peak season. In short, airlines will put out a whatever-it-takes strategy. “Once there is demand, the traditional way airlines attract passengers is with rate cuts,” said Andrew Charlton, an aviation analyst.

But for the longer term, there will be fewer airlines as many would collapse or consolidate, and the ones that survive will need smaller fleets, said Charlton. “There are a lot of costs [airlines will need] to recover - that inevitably means airfares will be under pressure to rise.”

Raking it in

On some sectors they have risen – sharply. For carriers and travel agencies, flying expat workers from Kuwait, Bahrain, and Saudi Arabia to here has turned out to be a more lucrative proposition.

Due to a ban on inbound flights from India, thousands of expat workers based in those countries are now looking to fly via UAE. As a result, fares have skyrocketed in recent weeks – Kuwait tickets that would once cost around Dh300, now go for as much as Dh4,000.

Even one-off deals are being created to target some of these fliers. The UAE-based travel agency, Shams Abu Dhabi, has started offering packages for Dh1,500, which include a quarantine-required hotel stay, airport pickup and drop, and COVID-19 tests for expats. “We are seeing a lot of demand for these packages,” said a spokesperson.

This trend could also push up hotel occupancy rates in UAE. Shams has tied up with hotels such as Dubai Palm, Delmon Palace, and City Avenue.

A war no one needs

Another irritant adding to the pandemic-induced woes is the small-scale conflict between Armenia and Azerbaijan over disputed territory. “Both are big touchpoints for UAE airlines,” said Ahmed. “But like Syria, if this conflict expands and continues, then out of an abundance of caution, flights will be stopped. And again, travel will take a battering,” he added.