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CAPA Live: global aviation update, Apr-2021

Analysis

Each CAPA Live, held on the second Wednesday of each month, contains a summary of the latest key developments by region.

In this report:

- Global aviation on an upward trend in Apr-2021.

- Global: COVID-19 cases per country.

- Global: COVID-19 vaccinations per country.

- USA: a remarkable domestic recovery amid testing times.

- China: continued impressive domestic capacity rebound.

- UK: a less optimistic view than previously projected, despite vaccine success.

- Brazil: battling COVID-19 may mean supressed capacity for some time.

- Singapore and Hong Kong: less than favourable capacity projections.

- Australia: ready for the trans-Tasman bubble.

Global aviation on an upward trend in Apr-2021

Global: total capacity as a percentage of 2019 levels, 30-Dec-2019 to 31-Mar-2021

Global capacity

The global dashboard shows that things are looking reasonably good this month, as all but one region contributed to growth.

Capacity has risen 8.8ppts, while the aircraft fleet in service rose 3.1ppts. It’s expected these figures will continue to rise through the next few months as the northern summer approaches.

Global: ASK, total seat capacity and total cargo capacity, Mar-2021 vs Apr-2021

gobal metrcis

Global fleet, Mar-2021 vs Apr-2021

global metric 2

Looking at the split between LCC and full service carriers: in 2019, before COVID-29 swept the world, the split showed that LCCs dominated 32.9% of the global market.

However, in 2020 this rose to 35.1% of all capacity. So far this year, with the return of many full service carrier networks, this percentage has reverted to approximately 32.3%.

Global LCC split, LCCs and non-LCCs to/from regions, 2011-2021 

LCC split

In Mar-2021 there was a cautious welcoming of a significant reduction in new COVID-19 infections; unfortunately this situation was short-lived and global infections are, once again, rising sharply in Apr-2021.

Looking at some of the major markets from around the world and many countries are currently doing well with the virus, including China, New Zealand, Australia and Singapore, all of which have essentially eliminated community transmission of COVID-19.

Global: COVID-19 new weekly cases per country

Coid cases

Some other noteworthy countries that have managed to take control of the virus include the UK, which was previously one of the worst affected countries globally, as well as South Africa.

The USA has also managed to reduce daily infection significantly; however, figures do remain stubbornly high, and edged up during Mar-2021.

COVID ok

On the other hand, many countries are now contributing to the rise in global tally of infections. Many European Union nations such as France, Germany, Italy, and Poland are all experiencing big increases in cases.

Most worryingly, Brazil, India, the Philippines, Argentina and Bangladesh are all also experiencing surging caseloads, raising fears of the potential for new variants of the virus to arise, and casting further doubt over the resumption of meaningful international aviation activity any time soon.

covidbad

Taking a look at where certain countries are up to in their COVID-19 vaccine rollout: along the vertical axis is the percentage of the population that has currently received one or more doses, and along the horizontal axis is the total number of the population that has received a vaccine.

As can be seen, many countries are under 10% of their total population having received a vaccination, however many of those nations are in a strong position where COVID has been eliminated and vaccinations are being administered at a slower rate, such as Australia. This strategy is working well, however raises questions as to the urgency of nations with low infection rates opening up borders in the future; there will come a day where these countries have to be okay with allowing COVID to enter the country, and that can only happen when everyone is vaccinated.

On the other hand, two countries that have had some of the worst COVID experiences globally, the USA and the UK, have done surprisingly well with their vaccine rollout. This could lead to situations where vaccinated countries can form travel bubbles whilst safely allowing COVID to spread amongst their population. Only time will tell which strategy proves most effective for the aviation industry.

Global: COVID-19 vaccination rates, by numbers vaccinated (with one or more doses) and percentage of the country's population 

Global vaccines

It’s clear that the USA has experienced significantly high levels of COVID, but what is surprising is the level to which the American domestic market has recovered.

In recent weeks domestic capacity has even exceeded the Thanksgiving 2020 and Christmas 2020 peaks, and continues to climb back towards that all-important 2019 benchmark.

With the summer season approaching, and although COVID cases in the US remain relatively high, a new peak of capacity is projected to be reached.

International capacity, mostly short haul to Mexico and the Caribbean, also continues to rise, although not as quickly as domestic. That having been said, international capacity is now far higher than what was in the first wave of COVID-19 infections in Apr-2020.

USA: domestic capacity, Dec-2019 to Dec-2021

usa dom

USA: international capacity, Dec-2019 to Dec-2021

China: continued impressive domestic capacity rebound

China was the first country to experience the effects of COVID-19. This can be seen where capacity dropped dramatically in Feb-2020, over a month earlier than in almost all other countries. The first outbreak was handled effectively, and since then domestic capacity has recovered at a remarkable rate.

The dip in domestic capacity in Feb-2021 was a direct result of government moves to limit Lunar New Year holiday travel, which was followed by yet another impressive domestic rebound from late February.

China’s domestic market recovery is one of the most positive stories in the industry to date. However, as can be expected, international capacity has a long way to go. 

China: domestic capacity, Dec-2019 to Dec-2021

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China: international capacity, Dec-2019 to Dec-2021

<a class=China international capacity" width="700" height="159" />

UK: a less optimistic view than previously projected, despite vaccine success

The UK has been one of the worst-affected countries in the world in terms of COVID-19 cases and overall deaths.

Despite a modest number of cases in the first outbreak in Mar-2020, the UK kept its borders open and relaxed almost all restrictions over the European summer of 2020, much like many other European countries. This gave way to a catastrophic rise in cases as autumn arrived.

In early Jan-2021 the UK went into yet another lockdown, which has only being relaxed now.

The only difference between the UK and many other European neighbours is that the vaccine rollout has been one of the most successful in the world.

However, until neighbouring countries achieve a similar level of immunisation, international travel will likely remain supressed over the summer, which is something extremely concerning for the UK aviation industry.

UK: domestic capacity, Dec-2019 to Dec-2021

<a class=UK Dom" width="700" height="149" />

UK: international capacity, Dec-2019 to Dec-2021

<a class=UK International" width="700" height="150" />

Despite suffering from one of the worst COVID-19 situations globally, Brazil’s domestic capacity recovered strongly in the latter half of 2020.

However, with the increase in cases, capacity has now begun to fall since Jan-2021.

International capacity remains low, and although decreasing, it is expected to rise over the summer if the COVID situation is brought under control.

Until then, local holiday-makers are expected to travel domestically and international visitors are likely to stay away.

Brazil: domestic capacity, Dec-2019 to Dec-2021

brazildom

Brazil: international capacity, Dec-2019 to Dec-2021

brazil int

Singapore and Hong Kong: less than favourable capacity projections

Singapore and Hong Kong, with their purely international aviation markets, have suffered dreadfully from an aviation perspective, despite managing COVID rather well.  

Forward projections for Singapore and Hong Kong are uncertain, and far less favourable than for other markets covered here, which enjoy the benefit of having relatively large domestic markets.

Singapore: international capacity, Dec-2019 to Dec-2021

<a class=Singapore international" width="700" height="145" />

Hong Kong: international capacity, Dec-2019 to Dec-2021

HK International

Australia is another country that has successfully supressed the virus.

As in the rest of the world, capacity fell dramatically in Australia in Mar-2020 with the first global outbreak of COVID-19. Australia managed the outbreak well, and became one of the first countries in the world in essentially closing its international border.

This strategy proved successful, but because the internal states also closed, in response to outbreaks in other states, domestic capacity has failed to achieve a sustained increase.

Over Jul-2020 to Sep-2020, Australia suffered from a severe second COVID wave in Melbourne, one that led to one of the strictest lockdowns. Domestic capacity continued to remain supressed, but COVID cases then fell to nearly zero, leading to a sharp increase in capacity just before Christmas, when state borders began to reopen fully.

Over the New Year period there was a third, small cluster of COVID in multiple cities around Australia, and domestic capacity declined.

Now, community transmission of COVID has all but been eliminated from Australia, and this is reflected in the domestic market recovering to 78% of 2019 levels. This strategy of closing international and domestic borders initially harmed the aviation industry, but now, domestic aviation in Australia is benefitting.

The projections for Australia show a significant increase of domestic seats through to the end of the year, but because of a slow rollout of the COVID vaccinations, international capacity will likely lag other nations that gain herd immunity sooner.

Any international increases in capacity will be driven by the trans-Tasman travel bubble with New Zealand.

Australia: domestic capacity, Dec-2019 to Dec-2021

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Australia: international capacity, Dec-2019 to Dec-2021

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It's worth noting that around the world many countries are using different strategies when it comes to COVID mitigation and different strategies when it comes to economic activity, including aviation. 

Some countries have successfully suppressed the virus, involving major restrictions on travel and movement, and are enjoying an earlier return to normal life and with it, a resumption of domestic aviation activity.

Others have done poorly on mitigating the spread but kept their economies open, with fewer restrictions on travel. What we do know is, aviation has been affected deeply by the virus and the mitigation efforts, therefore only time will tell which aviation markets come out of this on top.

But at the moment, both China and the USA are ones to watch, for very different reasons.

Vaccine rollouts and government acceptance of digital health passports – or not – will also be closely watched in the coming months. Many in the industry believe these to be the key next steps to restoring international aviation activity in a meaningful way.

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