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Europe aviation: Asia Pacific still a check on plateaued recovery

Analysis

According to IATA, international bookings for air travel are back to 80% of 2019 levels this year in the UK, and more than 70% in Germany. These nations were Europe's biggest aviation markets before the COVID-19 pandemic, so their pace of recovery is significant to Europe as a whole.

Outside Europe, international bookings are close to 80% of 2019 levels in the US, but only 30% in Japan and 5% in China.

In capacity terms, in the week of 21-Nov-2022 Europe's seat numbers are at 84.5%, which represents a shortfall of 15.5% against the equivalent week in 2019.

This is a deterioration of 0.4ppts from last week and right at the bottom end of the narrow range of 85% to 86% of 2019 capacity that Europe's recovery has occupied for more than six months.

Europe's intercontinental capacity to most regions is recovering faster than intra-Europe, with the notable exception of Europe-Asia Pacific.

Summary

  • Europe has 23.4 million seats this week, down 15% vs 27.7 million in the same week of 2019. Europe is fifth in the regional ranking on this measure.
  • Europe's 1Q2022 capacity was at 74% of 2019 levels, 2Q2022 at 84%, and 3Q2022 at 87%; 86% is projected for 4Q2022 and 90% for 1Q2023.
  • UK travel restrictions are back to zero, boosting international bookings in 2022.
  • In China, restrictions continue to hold back international bookings.
  • Most intercontinental regions to/from Europe are now at ~89% of 2019 capacity, but Europe-Asia Pacific is at only 60%.

Europe has 23.4 million seats vs 27.7 million this week in 2019 – down 15%

In the week commencing 21-Nov-2022 total European seat capacity is scheduled to be 23.4 million, according to OAG schedules and CAPA seat configurations.

This is 15.5% below the 27.7 million seats of the equivalent week of 2019, and a modest deterioration of 0.4ppts from last week's -15.1%.

This week's performance keeps Europe's capacity just below the range of -15% to -14% that it has occupied for most of the past six months.

This week's total seat capacity for Europe is split between 6.1 million domestic seats, versus 7.3 million in the equivalent week of 2019; and 17.3 million international seats, versus 20.4 million.

Europe's domestic seats are down by 16.9% versus 2019, compared with last week's -16.3%.

International seat capacity is down by 15.0% versus 2019, versus last week's -14.7%.

Europe: percentage change in weekly airline seat capacity vs equivalent week of 2019, weeks of 06-Jan-2020 to 21-Nov-2022

 

Europe remains fifth in the regional ranking by capacity as percentage of 2019's

Europe is still in fifth place in the ranking of regions measured by seats as a percentage of 2019 levels this week.

With capacity down by 15.5%, Europe is 11.7ppts better than sixth placed Asia Pacific, where capacity is down by 27.2%, but 7.1ppts below North America, where seat count is down by 8.4%.

Capacity is down by 5.3% in Africa and by 4.8% in the Middle East.

Yet Latin America's seat numbers are 2.8% above the equivalent week of 2019 – the fourth successive week that it has been above 2019 levels.

Middle East has taken an upward step in the trend this week, while North America and Africa have taken downward steps.

Asia Pacific, Latin America and Europe are broadly flat on last week.

Percentage change in passenger seat capacity vs 2019 by region, week of 30-Mar-2020 to week of 21-Nov-2022

 

Europe's 4Q2022 capacity is projected at 86% of 2019 levels and 1Q2023 at 90%

According to data from OAG and CAPA, Europe's capacity as a percentage of 2019 levels improved with each successive quarter of 2021.

It was 27% in 1Q2021, 34% in 2Q2021, 64% in 3Q2021 and 71% in 4Q2021.

The improvement has continued in 2022 so far, albeit at a slowing rate: capacity for 1Q2022 was 74% of 1Q2019 levels, 2Q2022 was at 84%, and 3Q2022 was at 87%.

For 4Q2022 the projection is 86.0%, which is only slightly below 86.2% last week but the seventh successive week of minor trimming.

Full year capacity for 2022 is projected at 82.1% of 2019 seat numbers.

Current schedules for 1Q2023 project capacity in the first quarter of next year stepping up to 89.6% of 1Q2029 seat numbers, but this has been trimmed from 89.6% in the week of 14-Nov-2022.

UK travel restrictions back to zero, boosting international bookings

A chart from IATA's always enlightening Chart of the Week clearly illustrates the close relationship between travel restrictions and international air travel bookings.

Taking the UK, Germany, US, Japan and China as examples, the chart shows international ticket bookings for each year from 2019 to 2022, indexed to 100 in 2019, against the level of travel restrictions.

In each of the five countries international bookings fell to very low levels in 2020.

In the US and the two European countries bookings recovered to approximately 60% of 2019 levels in 2021 and approximately 80% in 2022 (a little lower than this in Germany) as travel restrictions were relaxed and/or removed.

UK travel restrictions have been removed entirely, and the UK has the highest percentage of 2019 bookings in 2022, according to the IATA chart.

China restrictions continue to hold back international bookings

However, bookings for international air travel in 2021 remained at very low levels in both China and Japan, because restrictions remained very tight.

In 2022 there has been a modest recovery in Japan, to more than 30% of 2019 booking levels, reflecting the removal of visa requirements for tourists since 11-Oct-2022.

By contrast, bookings in China remain at below 5%, due to ongoing strict barriers to international travel.

International air travel bookings and travel restrictions, 2019 to 2022

 

Most intercontinental regions to/from Europe are now at approximately 89% of 2019 capacity…

Although only two European countries are shown in the IATA chart, it is fairly illustrative of the situation for Europe as a whole.

This is also reflected in the continent's capacity recovery.

As noted above, total Europe capacity is now at 84.5% of the equivalent week of 2019. Intra-Europe capacity is at 86.1%, with markets to/from destinations outside Europe generally ahead of this.

Europe-Africa capacity is as high as 100.9%, while most other intercontinental regions to/from Europe are at approximately 89%.

Europe-North America is at 89.4%, Europe-Latin America is at 89.5%, and Europe-Middle East at 89.1%.

…but Europe-Asia Pacific is at only 60%

The clear laggard remains Europe-Asia Pacific, where capacity is only at 60.4%, due to the importance of China and Japan in this market.

Route regions from Europe: percentage of seats of the equivalent week of 2019, week of 31-Oct-2022

 

COVID-19 is not a major factor in Europe's sideways capacity recovery

Europe's capacity recovery is now in its seventh month in a broadly sideways trend of seats as a percentage of the equivalent week of 2019.

With almost no meaningful travel restrictions in most major European nations, COVID-19 has not been a factor in preventing the next significant upward step in this trend, except for travel to/from Asia Pacific.

The gap to 2019 capacity levels will only be further closed once recruitment and aviation supply chain constraints have been normalised and when Europe's economic outlook improves.

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