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Expanding Airline Networks Could Help Build VFR Recovery, Analysis Says

Expanding Airline Networks Could Help Build VFR Recovery, Analysis Says
Joe Cortez

New analysis of the aviation industry by Fitch Ratings suggests the recent moves by airlines to bolster their networks could ultimately help them recover faster. By focusing on openings created by the COVID-19 pandemic, leisure travelers could benefit first, resulting in flyers slowly coming back to aircraft.

As the COVID-19 pandemic continues, airlines have been forced to change their entire network strategy. Because business travelers are now conducting fewer meetings in person and more online, the domestic carriers have focused on a “VFR” model, short for “Visiting Friends and Relatives.” New analysis by Fitch Ratings suggests those moves could ultimately help airlines recover as the outbreak comes to a close.

Airports and Airlines Focused on Domestic Service Faring Better Than International Terminals

Because borders around the world remain closed with quarantine restrictions for all inbound international travelers, airports which rely on carriers from all around of the world are struggling. In addition, traditional business hubs are equally stressed for customers, because virtual meetings are taking over. However, Fitch’s analysis shows a growing trend: airports focused on local domestic service are fairing better than their large, international partners.

“Weakness in operational performance prevails across the entire airport sector but airports with regional domestic-focused services provided by domestic airlines generally have performed incrementally better during the pandemic,” the analysis reads. “When compared with facilities more reliant on international airlines.”

Airlines are taking note of that as well, and are adjusting their networks to take advantage of a surge in domestic leisure travel. Alaska Airlines, JetBlue and Spirit Airlines have added a number of routes to their networks throughout 2020 as they focus on a “VFR” strategy, while United Airlines is moving back into New York’s John F. Kennedy International Airport (JFK).

Ultimately, these changes may benefit the end consumer. Fitch predicts additional competition will spur competition and could result in both improved pricing and choices.

“This bodes well for airports seeking to diversify services and appeal to all types of travelers, particularly those historically loyal to specific carriers,” the analysis reads. “The shift in airline composition may alter airports’ capex plans, given the need to accommodate a more diverse mix of airlines.”

However, the growth may come at a price for smaller airports. While the expansion is focused on targeted markets, smaller airports with fewer options may either see a reduction of service or a lack of additional operations, as airlines get more selective with their operations.

Airlines Continue to Encourage VFR Travel, With Encouraging Results

Fitch’s projections are in-line with airlines continued plans to encourage more leisure travelers to book airfare. Three carriers – American Airlines, JetBlue and United Airlines – are now offering COVID-19 tests to certain flyers to help them bypass quarantine requirements in place for visitors to Hawaii. In addition, another study says if the airlines can effectively combat air travel stress, it’s plausible that leisure travel could recover even faster.

However, previous projections suggest that even with the focus on customer experience, aviation may be in for a long recovery. Some financial outlooks suggests airlines may not see pre-pandemic levels of travel for years to come.

View Comments (3)

3 Comments

  1. mhrb

    October 22, 2020 at 4:49 am

    Why on earth would they use “VFR” when it already has an established meaning in aviation?

  2. kkua

    October 22, 2020 at 7:07 pm

    Visual Flight Rules…. why on earth visiting friends and relatives?

  3. strickerj

    October 23, 2020 at 6:57 am

    I’ve always wondered that too, though I’ve heard “VFR” for “Visiting Friends and Relatives” (as a further distinction from leisure travel which also includes vacation) for years now, at least here in the U.S.

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