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Europe flight cancellations cap capacity recovery, boost load factor

Analysis

In the past week there has been another batch of headlines about flight cancellations and airport capacity caps, including at British Airways, Wizz Air, KLM, Lufthansa and Heathrow Airport. Staffing shortages across much of European aviation have limited the industry's ability to meet pent-up demand as the summer peak approaches.

This helps to explain why Europe's capacity recovery as a percentage of 2019 levels has been range-bound for eight weeks.

The region's seat capacity was at 86.6% in the last week of May-2022 and is at 86.4% in the week commencing 11-Jul-2022, or a shortfall of -13.6% against the equivalent week in 2019. Europe remains fifth in the regional ranking, above only Asia Pacific, where capacity is down -21.4% versus 2019.

Europe's passenger traffic is recovering at a slower pace than capacity – at least, it was up to the most recent monthly traffic data in May-2022. Nevertheless, passenger load factors were improving, and this trend is likely continuing into the summer peak, partly thanks to cancellations.

Summary

  • Europe has 31.8 million seats this week, which is down -14% vs 36.9 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 at 84%. 3Q2022 is projected at 88%.
  • Europe's passenger traffic is recovering at a slower pace than capacity.
  • Passenger load factors were improving as of May-2022, and this trend is likely continuing into the summer peak.

Europe has 31.8 million seats vs 36.9 million this week in 2019, down -14%

In the week commencing 11-Jul-2022, total European seat capacity is scheduled to be 31.8 million, according to OAG schedules and CAPA seat configurations.

This is -13.6% below the 36.9 million seats of the equivalent week of 2019, and a decline of 0.6ppts from last week's (04-Jul-2022) shortfall of -13.0%.

This is Europe's eighth 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 8.1 million in the equivalent week of 2019; and 24.3 million international seats, versus 28.8 million.

Europe's domestic seats are down -6.9% versus 2019's, compared with last week's -5.7%.

International seat capacity is down -15.5% versus 2019's, compared with last week's -15.1%.

Europe: percentage change in weekly airline seat capacity vs equivalent week of 2019, weeks of 06-Jan-2020 to 04-Jul-2022 

 

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

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

With capacity down -13.6%, Europe is 7.8ppts better than sixth placed Asia Pacific, where capacity is down -21.4%. Europe is 1.6ppts below the Middle East, where seat count is down -12.0%.

Capacity is down -9.8% in North America, -7.5% in Africa, and -4.9% in Latin America.

Asia Pacific, Latin America and Middle East have taken upward steps in the trend this week, whereas North America, Africa and Europe have taken downward steps.

Percentage change in passenger seat capacity vs 2019 by region, week of 30-Mar-2020 to week of 11-Jul-2022

 

Europe's 3Q2022 projection is trimmed from 89% to 88%

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 87.8% of 3Q2019 seat numbers – down by 1.1ppts from last week.

There has been a slow, but steady, trimming of 3Q schedules as a result of staffing challenges in the industry.

Over the past week Wizz Air has trimmed its peak summer schedule by 5%, British Airways has cut an additional 10,300 flights from London airport schedules between Aug-2022 and Oct-2022, and Heathrow is reviewing schedules submitted to it by airlines.

Two months ago, 3Q capacity was projected at 91.7% of 2019 levels.

Further trimming to bring 3Q2022 in line with the 86% to 87% range of the past eight weeks seems likely.

Europe's passenger traffic is recovering at a slower pace than capacity

As noted above, Europe's capacity recovery has been on a plateau for nearly two months.

Data on traffic lag capacity data – monthly passenger data are available only up to May-2022 – so it is not yet possible to determine whether or not the traffic recovery is also treading water.

According to ACI Europe, passenger numbers at Europe's airports in May-2022 were -18.8% below May-2019 levels. Data from OAG/CAPA on seat numbers in Europe in May-2022 were -15.1% below 2019 levels.

This indicates that passenger traffic continued to recover at a slower pace than capacity, as has been the case throughout the pandemic.

Europe: percentage change in weekly seat capacity & passenger numbers vs 2019 levels, weeks of 01-Mar-2020 to 03-Jul-2022

 

Passenger load factors were improving as of May-2022…

Nevertheless, IATA data on load factors show that the gap was narrowing – at least up to May-2022.

According to IATA, passenger load factor for Europe's airlines was 73.9% in Mar-2022, 79.5% in Apr-2022 and 80.7% in May-2022.

Relative to load factors in the equivalent month of 2019, the gap narrowed from 10.0ppts in March, to 5.7ppts in April and 3.0ppts in May.

…and improvement is likely continuing into the summer peak

Monthly traffic data for Jun-2022 are not yet available, but OAG/CAPA seat data show that there was not much change in capacity as a percentage of 2019 levels from May-2022.

It seems likely, however, that the trend of load factor improvements continued into Jun-2022.

Evidence from the few leading European airlines that still report monthly traffic data demonstrates an improving load factor trend: Ryanair's reported load factor was 91% in Apr-2022, 92% in May-2022 and 95% in Jun-2022. Wizz Air's was 83.4% in Apr-2022, 84.2% in May-2022 and 86.1% in Jun-2022. For Norwegian, it was 78.7% in Apr-2022, 79.2% in May-2022 and 84.9% in Jun-2022.

The trends reported by these low cost airlines cannot necessarily be extrapolated across all of Europe's airlines. However, they provide some support to the hypothesis that load factor continued to improve into Jun-2022, even if the pace may have slowed.

Recovering demand into the summer season should anyway have led to improving loads, which were likely further boosted by flight cancellations and consequent rebooking onto other flights.

These factors can be expected to lead to further load factor gains into Jul-2022 and Aug-2022.

However, to sound a note of caution, continued headlines about flight cancellations and schedule reductions could eventually start to erode demand.

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