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Europe aviation: travel disruption erodes demand as capacity plateaus

Analysis

The flatlining of Europe's capacity recovery is no surprise in the light of shortages in the aviation supply chain – especially labour supply.

However, a recent decline in airline bookings in Europe is a sign that demand is starting to be eroded by travel disruption concerns.

Europe's capacity recovery as a percentage of 2019 levels has now been on a plateau for 10 weeks, barely moving since the last week of May-2022. The region's seat capacity is at 86.7% in the week commencing 25-Jul-2022, which is a shortfall of -13.3% against the equivalent week in 2019.

Europe remains fifth in the regional ranking, above only Asia Pacific, where capacity is down -23.1% versus 2019. In the Middle East capacity is down -13.0%, while North America capacity is down -9.9%, Africa -9.2%, and Latin America is down -5.1%.

Summary

  • Europe has 31.9 million seats this week, down -13% vs 36.8 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 and 2Q2022 was at 84%. 3Q2022 and 4Q2022 are both projected at 87%.
  • Europe's airline bookings have been declining since late Apr-2022. This suggests demand is being eroded by travel disruption concerns.

Europe has 31.9 million seats vs 36.8 million this week in 2019 – down -13%

In the week commencing 25-Jul-2022, total European seat capacity is scheduled to be 31.9 million, according to OAG schedules and CAPA seat configurations.

This is -13.3% below the 36.8 million seats of the equivalent week of 2019, but an improvement of 0.6ppts from last week's -13.9%.

This is Europe's 10th successive week stuck in a narrow range between -12.5% and -14.4%.

This week's total seat capacity for Europe is split between 7.5 million domestic seats, versus 7.9 million in the equivalent week of 2019; and 24.4 million international seats, versus 28.9 million.

Europe's domestic seats are down -5.4% versus 2019, compared with last week's -6.9% (18-Jul-2022).

International seat capacity is down -15.5% versus 2019, compared with last week's -15.9% (18-Jul-2022).

Europe: percentage change in weekly airline seat capacity vs equivalent week of 2019, week of 06-Jan-2020 to week of 25-Jul-2022

 

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

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

With capacity down -13.3%, Europe is 9.7ppts better than sixth placed Asia Pacific, where capacity is down -23.1%. Europe is 0.3ppts below the Middle East, where seat count is down -13.0%. Capacity is down -9.9% in North America, -9.2% in Africa, and -5.1% in Latin America.

Europe has taken a (modest) upward step in the trend this week, whereas Asia Pacific and Middle East have taken downward steps. North America, Latin America and Africa are broadly stable on last week.

Five of the six regions are increasingly in a narrow range of each other, with Asia Pacific continuing to be the clear laggard.

Percentage change in passenger seat capacity vs 2019 by region, week of 30-Mar-2020 to week of 25-Jul-2022

 

Europe's 3Q2022 projection is trimmed to 87%; 4Q2022 is also at 87%

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.

Capacity for 1Q2022 was 74% of 1Q2019 levels and 2Q2022 was at 84% of 2Q2019 levels.

Projections for 3Q2022 are at 87.4% of 3Q2019 seat numbers. Although schedules are more stable than at any other time since the onset of the COVID-19 pandemic, this 3Q projection is 1.4ppts lower than it was one month ago (Jun-2022), and 3.5ppts lower than two months ago (May-2022).

As CAPA has noted previously, further trimming to bring 3Q2022 in line with the 86% to 87% range of the past eight weeks – or even slightly lower, given staffing shortages in European aviation – seems likely.

Jul-2022 and Aug-2022 are currently projected in this range, but Sep-2022 is at 88.6%.

See related CAPA report: Europe aviation: 3Q2022 will struggle to beat 2Q's 84% of 2019 seats

Looking ahead to 4Q2022, the final quarter of the year is projected at 87.1%.

Oct-2022 is projected as high as 90.6%, which seems likely to be trimmed, since it is the final month of the summer schedule when absolute capacity levels are still relatively high.

There is more potential for Nov-2022 and Dec-2022 percentages to remain fairly stable, given the lower absolute capacity deployment in the winter schedule.

Europe's airline bookings have been declining since late Apr-2022

The disruption of the aviation supply chain caused by COVID-19 has been a global challenge for the industry. However, relative to the US, for example, Europe has suffered more from aviation labour shortages – a crucial part of the supply chain.

For European aviation, international markets are more important and travel restrictions were tighter in 2021. This meant that the capacity ramp-up from winter 2021/2022 into summer 2022 – once travel restrictions were relaxed – was much greater in Europe than in the US.

This is also evident in airline bookings. Data from IATA/DDS show bookings in the European Union were below 40% of 2019 levels in Jan-2022, but surged above 90% by late Apr-2022. By contrast, bookings in the US were already around 60% in Jan-2022 and reached approximately 90% by Mar-2022.

Since late Apr-2022, by late Jun-2022 EU airline bookings gently declined to a level of around 70%. In the US, however, bookings remained in the region of 90% (albeit with some volatility).

Airline bookings by purchase date as percentage of 2019 levels, 2021 and 2022

 

Air travel demand is being eroded by travel disruption concerns

Europe's more rapid capacity ramp-up has placed greater stress on its supply chain, leading to flight cancellations and airport capacity caps.

Strong pent-up demand after two years with no summer travel for many has driven the recovery of European aviation. As noted previously by CAPA, flight cancellations may even have benefited load factors in these conditions.

See related CAPA report: Europe flight cancellations cap capacity recovery, boost load factor

However, the gentle decline in the booking curve in Europe since Apr-2022 is a cause for some concern.

It suggests that the strong pent-up demand for air travel is being partially eroded by concerns over travel disruption.

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