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CAPA: dire winter outlook for European aviation

Analysis

European aviation powerhouses, the UK, France and Germany, are each expected to recover to just 40% of 2019 airline capacity levels by the end of 2020, according to a new CAPA airline capacity projection.

The UK, France and Germany airline projections are contained in CAPA's Air Capacity Models, which provides breakdowns of each nation’s domestic and international outlook for seat capacity, supported by OAG – as well as each city and route pair – based on the 2019 actuals.

Combined with government statements, airline network announcements and capacity projections, the model provides a robust and granular guide for future air capacity projection.

Using assumptions around 6 key phases – Zero/Grounded, Skeleton, Acutely Restricted, Basic, Restrained and Standard – the database allows the tracking of the pace of recovery in each relevant market.

Making hay in the sunshine is challenging - and winter is coming

Airline capacity to and from Europe's biggestmarkets will struggle to achieve 30% of 2019 levels by the end of 2020, according to CAPA's Air Capacity Models.

CAPA Chairman Emeritus, Peter Harbison, said: “Europe’s big three aviation market leaders, the UK, France and Germany, are shadows of their former selves, and while some improvements are expected this summer – off very low baseline levels – the industry faces a challenging situation.

"The summer peak European earnings season is in disarray and, as winter approaches, forward bookings will offer little comfort. The European marketplace remains highly fragmented, making it hard for airlines, travellers and surface providers to plan."

The modelling process for CAPA's projections

The following country graphs in the modelling show CAPA's projection of airline capacity levels until end-2020.

The bold yellow line shows 2019 capacity levels, the pale yellow line illustrates the growth path of new COVID-19 infections and the pale and dark blue bars respectively show the projected domestic and international capacity for the period leading up to 31-Dec-2020.

The infection rate has an impact on the ability and willingness of states to open up to international air services, hence the inclusion of this indicator in the modelling. Where the infection rate is low, the propensity for international (and, where applicable, domestic) travel is higher.

1. The UK market is dominated by Europe's big three LCCs

The UK, predominantly an international market, is fortunate in being home to two aggressive LCCs, in Ryanair and easyJet; Wizz Air too is a UK listed company.

Between them, these LCCs account for nearly 56% of all international seats in the UK. British Airways and its IAG partners account for a percentage in the mid-teens.

UK airline international airline seat capacity, week commencing 29-Jun-2020

The UK has one of the higher infection rates per capita - which is causing some European states to be reluctant to accept UK travellers without quarantining - and while it remains relatively high, does appear to be trending downwards.

Whereas weekly capacity in 2019 topped seven million seats, it is unlikely to exceed two million in 2020.

CAPA’s UK Air Capacity Model projections: domestic and international seats, 2020

With over 40% of the German market (which includes a slightly larger domestic component than the UK), Lufthansa Group airlines play a much larger role, with neither easyJet nor Ryanair achieving a 5% market share threshold.

UK airline domestic and international airline seat capacity, week commencing 29-Jun-2020

The German international market overall is tracking at around 25% of 2019 levels.  Despite some recent locally focussed outbreaks, the COVID-19 infection rate has diminished considerably.

CAPA’s Germany Air Capacity Model projections: domestic and international seats, 2020

3. France's LCC penetration is higher than Germany's; year on year Dec-2020 capacity also about 75% down on 2019

Air France airlines account for 39% of system seats, with added capacity from Air France-KLM group pushing that above 40%; but easyJet, Ryanair and Spanish LCC Volotea play a more significant role than in Germany.

France airline domestic and international airline seat capacity, week commencing 29-Jun-2020

France too is trending down with its infection rate, albeit still higher than some. The country has a slightly larger domestic market than the UK and Germany, and this will feature more substantially in the industry's recovery.

 France Air Capacity Model projections: domestic and international seats, 2020

Time for governments to step up and act to create a platform for future growth

2021 promises to be a lot worse for the aviation industry than 2020 without a concerted joint effort from governments to support the sector. CAPA Chairman emeritus Peter Harbison said, "Airlines across Europe and globally are mortgaging the future in their efforts to keep cash flowing. All this is doing is putting band-aids on what is a gaping wound.

"Without inter-governmental coordination and a decent, new, sensible framework, aviation can only look forward to a much more challenging marketplace in 2021. What is needed is coordination. The price of inaction and continuing as before inevitably leads to protectionism, much less competition and far fewer people flying, and an industry which will be savagely uneconomic.

“European seat capacity is down 82% year-on-year for the week of 15-Jun-2020, compared to a decrease of around 87% in Apr/May-2020. The decrease been "broadly similar" across Europe’s big three markets. Many airlines are reintroducing routes, but generally with reduced frequencies and smaller aircraft than before the coronavirus crisis. With this outlook, we are not at all confident about the prospects for 2021 - again, unless governments can get their acts together”.

About CAPA’s ‘Air Capacity Model’

CAPA’s new ‘Air Capacity Model’ has been developed to provide the aviation and travel industry with a robust guide to future air capacity possibilities anchored in:

  • Baselines based on aircraft configuration data in the CAPA Fleet database and powered by OAG schedules;
  • Decisions and announcements by the British, French and German governments on travel restrictions and border announcements;
  • Assessments by CAPA, based on real time reports from CAPA’s unique daily news system, which collects over 300 stories every day:
    • Airline statements, route plans and pricing;
    • The public’s willingness and propensity to fly;
    • The introduction of standard criteria on sanitary conditions onboard aircraft and at airports;
    • ‘Right-sizing’ of aircraft to match demand.
  • The airline capacity projections are updated in real time, as major new events occur (made possible using CAPA's unique daily news gathering capability).

The CAPA ‘Air Capacity Model’ is available by 12-month subscription, providing a monthly excel file* with Input (assumptions) and Output tabs.

The Output tab offers a total market graphic, as well as airport and route data summary tables.

Live demonstrations of the new model are available on request by completing your details here or contacting membership@centreforaviation.com

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