Europe aviation: price inflation evaporates as capacity recovery softens

Data on growth in prices for air travel in the EU and the UK indicate that inflation in passenger fares has all but evaporated in Europe, particularly in the crucial international market.

Traffic data from the International Air Transport Association (IATA) show that demand (as measured by RPKs) was approaching closer and closer to 2019 levels through 2023 - at least as far as Nov-2023 (the most recent month for which traffic results are available).

However, Europe's capacity recovery trend (based on schedules filed by airlines) is softening into 1Q2024 and this could indicate a similar trend for traffic.

After benefitting from the demand overhang from the pandemic, traffic may be returning to being mainly GDP-driven.

And the economic outlook is lukewarm.