During the darkest days of the pandemic, 2022 was spoken about in hopeful tones as the year the world just might get back to normal. For the travel sector generally, this was going to be the year that restrictions eased, tourism opened back up and airlines enjoyed the fruits of two years of pent-up demand.

In reality, as we move through 2022, the industry is still grappling with considerable uncertainty. Quite aside from the ongoing BA.2 Omicron wave and the possibility of further Covid-19 variants to come, travel is being buffeted by soaring oil prices, a hike in the cost of living and the fallout from the Ukraine invasion.

Speaking to AFP in April, Ryanair’s chief executive, Michael O’Leary, said the war alone had cost the carrier a million passengers over the course of February and March. That followed a December and January in which the Omicron variant “badly damaged” bookings and yields. This is not to say that airlines are putting their recovery plans on hold, but simply that capacity forecasting remains a more complex job than it was pre-pandemic.

George Ferguson, senior aerospace and airline analyst at Bloomberg Intelligence, remarks that it is hard to make clear predictions at the moment. “If you think back to 2019, airline managers didn’t have to worry about a mutating virus, and you didn’t have this wildcard of Russian aggression in Ukraine,” he says. “I think airlines are very hopeful for a summer recovery. But they have to be very flexible and responsive, because if fuel prices stay high, they will have to reprice their tickets higher or cut capacity.”

The rise of the low-cost carrier

While the challenges will affect everybody, it seems clear that some carriers are better placed to ride out the storm than others. On one hand, business travel is facing a muted recovery – according to Bloomberg Intelligence, US business travel was down 50% in February, compared with February 2019. On the other hand, leisure travel is making a stronger comeback, and within that, low-cost carriers are stealing the lead.

“Everybody wants to get out and go on vacation – they’ve been through a pandemic for a couple years – and a lot of these people are price-sensitive,” says Ferguson. “With the spike in oil prices, they will be drawn to low-cost carriers because they can deliver seat miles more cheaply and keep fares lower. It’s harder for the full-service carriers to do that.”

Of course, low-cost carriers are not immune to price hikes, especially given that fuel costs account for a higher proportion of their fares. Already, we are seeing debate around how much of this cost should be passed onto the consumer, and how much can be absorbed by the airlines themselves. However, the market appears to be in relatively good health.

According to the global travel data provider OAG, low-cost carriers had reached 87% of their pre- Covid capacity by March, compared with 79% for full-service carriers. And while low-cost carriers still only account for 32.1% of capacity globally, just a slight rise on 30.1% two years ago, there have been significant shifts in Europe, South East Asia and the Middle East. In western Europe, for instance, market share has grown from 36.9% to 45% – the result in part of aggressive expansion strategies from airlines like easyJet and RyanAir.

“Over the past two years, significant capacity has left primary airports around Europe as legacy carriers dramatically scale back in short haul,” says Sophie Dekkers, chief commercial officer at easyJet. “This has enabled easyJet to further strengthen our position at these primary airports, where we have very high head-to-head overlap with legacy carriers. At the end of 2021, as we saw other airlines retrench, we put over 1.1 million additional seats on sale from our largest airport, London Gatwick.”

She adds that easyJet is adding 25 aircraft to its operational fleet in 2022, having launched 16 new routes from the UK at the end of 2021 and eight more since then. “We are continually reviewing our network to identify profitable growth opportunities, and we have added thousands of additional seats across our entire network to serve the increase in demand,” says Dekkers. “We will of course continue to compete even more strongly against other low-cost carriers on our head-to-head routes with them, and, as always, we welcome healthy competition as it is good for consumers to have a choice.”

Capitalising on demand

This chimes with a broader trend among budget airlines, which have been looking to take advantage of renewed demand. Wizz Air recently launched 18 new routes from London Gatwick, as well as three new routes between Italy and the Greek island of Skiathos. RyanAir has announced 14 new routes from its three London airports, while Vueling has added five new Spanish routes. What is more, these kinds of ambitions are not limited to existing low-cost carriers. Since the start of the pandemic, we have witnessed the launch of several new airlines, including Breeze and Avelo in the US and Flyr, Norse Atlantic and PLAY in Europe. Although it may seem like a counterintuitive time to be entering the industry, these start-ups have several points working in their favour. For one thing, they lack the debt accrued by legacy airlines. For another, they can build something from the ground up, responding to today’s market conditions as they find them rather than having to rejig their business models.

“It certainly is challenging to start an airline during a pandemic – it may even sound bizarre to people outside the aviation industry – but when you look at it from our side you have a favourable market to build an airline,” says Birgir Jónsson, CEO of PLAY. “Brand new aircraft become available for the best prices, lease rates are nearly a quarter lower than pre-Covid, airports are willing to fill gaps and there are a lot of staff looking for work.”

An ultra low-cost carrier based in Iceland, PLAY began flying between Iceland and Europe in 2021, and has recently begun adding services to North America. Flights to Baltimore and Washington, DC, commenced on 20 April 2022, followed by flights to Boston in May and New York in June. Jónsson says the carrier’s mission is to make transatlantic travel affordable.


Capacity reached by low-cost carriers of their pre-Covid levels by March 2022.


Capacity reached by full-service carriers of their pre-Covid levels by March 2022.

“One of the challenges we’ve seen, in terms of business travel, is that everyone’s flying to the same destinations, which makes it really hard to raise fares.”

George Ferguson


The market share for low-cast carriers in Western Europe, up from 36.9% before Covid-19.


“We’re expecting to turn a profit during the second half of the year, so obviously we are looking for demand and our load factor to increase as the year continues,” he says. “Our booking flow is strong, our new destinations have been very well received, and I believe that we are expanding our network and operation at precisely the right time as the demand in the market increases.”

He adds that PLAY will have the flexibility to minimise the impacts of high oil prices, having implemented a fuel surcharge that varies between markets and destinations. “As in life itself, there is always some uncertainty, but we are absolutely on track to realising our vision of building PLAY into a profitable airline operating a hub-and-spoke transatlantic network,” he says.

Changes to come

Low-cost carriers may have another weapon in their arsenal this summer, namely the resumption of so-called ‘use it or lose it rules’. Under EU regulations, airlines must use their slot 80% of the time, or hand the permit back. While the level was cut to 50% during the pandemic, the UK government has moved back to a 70% policy and the EU Commission to 64% – just in time for the summer season. Given their increase in capacity, budget airlines are less likely to fall foul of these rules, which could cause headaches for their full-service competitors. If you simply cannot attract the passengers you need on board, retaining your slot could mean running near-empty ‘ghost flights’ at considerable cost to the environment.

This was a problem even before the slot rules intensified – official data reveals that 14,472 ghost flights (with less than 10% passenger capacity) left UK airports between March 2020 and September 2021. The new requirements could further encourage this wasteful practice. Lufthansa boss Carsten Spohr said that the airline would need to run 18,000 “extra, unnecessary flights” over the winter in order to secure its take-off and landing rights.

With little risk of flying empty themselves, the likes of easyJet and Wizz Air have been vocal about wanting slot rules to return. “Airlines will be very focused on trying to keep those slots, and I would think the low-cost carriers are better positioned to do it, because they can do so at a lower fare point,” says Ferguson. “They can watch around the world, and if existing airlines can’t afford to fly profitably in some of these slots, they can come in and get access to an airport they didn’t previously have access to.”

At least over the short and medium-term, then, low-cost carriers are becoming ‘a’ – if not ‘the’ – dominant force in the aviation industry. So, will this trend persist over the longer term? Ferguson thinks not, arguing that the turning point will happen once business travel starts to pick up.

“One of the challenges we’ve seen, in the absence of business travel, is that everyone’s flying to similar destinations, which makes it really hard to raise fares,” he says. “Once you do get the business traveller back, you’ll see that diversification come back to networks and then that’ll start to improve fares too, especially for the full-service carriers.”

However, summer 2022 looks poised to be the season of the cash-strapped holidaymaker, seeking the best deal on their flights after two years stuck at home. “We see lots of reasons for confidence for travel and for easyJet this year, and we expect to be near 2019 levels of flying for this summer,” says Dekkers. “There is also a strong turnaround with huge pent-up demand, which we see each time restrictions are lifted. As those continue to ease, and with many destinations now completely restriction-free for vaccinated travellers, we would expect to see even greater confidence for travel.”