NATS and NAV Canada are now using the pandemic’s freeing up of the skies to test giving pilots free rein to chart their own flight paths between Europe and North America. NATS and NAV Canada, which are responsible for UK and Canadian airspace, say they won't designate specific routes on days when traffic allows, letting airlines select paths "based entirely on optimum route, speed and trajectory." The experiment is open-ended and is only now possible due to new real-time data satellite systems used to monitor North Atlantic air traffic.
This is great news for all cargo operators flying at full-tilt right now, they will save a fortune in fuel. If the test works well we could expect to see this process rolled-out when traffic recovers, at least during the least busiest periods at first. Do not underestimate the significance of this test. If it works you can expect to see Transatlantic flights costing far less and producing far fewer emissions. Putting it into perspective – If this was running in full in 2019 then NAS would have flown 30% more flights in the black (with the figures to hand), maybe more. The biggest gain will be had by IAG if this air traffic test is successful. This really is exciting news. Maybe it is time to go out and buy IAG, Delta and JetBlue shares (if you have not done so already).
The Transatlantic market is well used to price wars, it is in a perpetual one and those that survive year in and year out are the meanest airlines out there, but the last time we saw an all-out price war in Australia nearly a decade ago two airlines saw their bottom lines hammered, one collapsed and one nearly collapsed. Now here we are again – This time the Sydney/Melbourne route is being attacked by Regional Express (Rex). It released A$49 fares the other day for economy and A$199 for business, but now Virgin have responded matching the price for forward bookings, while JetStar (Qantas) has gone down to A$44 on some seats for March bookings. But as we all know – Rex is a full-service airline, the others are low-cost, so its edge remains. All it has to do is get the message out over and above the huge brand awareness of its giant competitors.
Rex will start flying three Boeing 737s, previously used by Virgin, between Sydney and Melbourne in March before adding Brisbane to its network in April – The Golden Triangle is back under attack in a three-way fight for the first time in a decade – Can Rex take the credit for lower costs to passengers and service where the other airlines failed? Time will tell, but the pandemic debt burden at the other airlines will mean that this attack on their core most profitable routes will cause a great deal of pain at the worst possible time – Rex is going straight for the throats of JetStar and Virgin and in so doing Qantas. It is the very last thing that investors in those airlines wanted to see happen. It means, as it did ten years ago, that there are too many seats to fill, the demand is not there. Watch very closely for Rex load factors for February/March/April 2021 as those figures will inform us straight away as to if this fight is going their way, or if they have not been able to penetrate the branding screens of Virgin and Qantas/JetStar.