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European aviation: recovery remains consistent but passenger load factors continue to slide

Analysis

Europe's seat capacity recovery as a percentage of 2019 levels remains in the narrow range of 86%-87% that it has occupied almost every week since late May-2022.

Seat numbers in Europe are at 87.5% in the week commencing 10-Oct-2022, which represents a shortfall of 12.5% against the equivalent week in 2019. This is the second successive weekly improvement in this measure, but not quite enough to break through the range of the past few months.

Europe remains fifth in the regional ranking, above Asia Pacific, where capacity is down by 22.9% versus 2019, but below the Middle East, where capacity is down by 10.8%. North America capacity is down by 7.5%, Africa by 6.2%, and Latin America is down by 3.2%.

During the period of flatlining in Europe's capacity recovery, the improving load factor trend has started to reverse. According to IATA data, the gap to 2019 load factors widened in Jul-2022 and Aug-2022.

Data for leading LCCs point to this trend continuing for the European airline sector in Sep-2022.

Summary

  • Europe has 29.5 million seats this week – down 13% vs 33.7 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%, which is the same level as projected for 4Q2022.
  • In Aug-2022 European airline load factors again widened the gap to 2019 levels.
  • Data from Ryanair, Wizz Air and Norwegian suggest that this trend may have continued into Sep-2022.

Europe has 29.5 million seats vs 33.7 million this week in 2019 – down 13%

In the week commencing 10-Oct-2022, total European seat capacity is scheduled to be 29.5 million, according to OAG schedules and CAPA seat configurations.

This is 12.5% below the 33.7 million seats of the equivalent week of 2019, and an improvement of 1.1ppts from last week's -13.6%. This is the strongest week-on-week improvement in this measure since a pandemic era peak of -11.4% was reached in late Aug-2022.

However, it keeps Europe's recovery broadly in the same range as it has occupied since late May-2022.

This week's total seat capacity for Europe is split between 7.2 million domestic seats, versus 7.7 million in the equivalent week of 2019; and 22.3 million international seats, versus 26.0 million.

Europe's domestic seats are down by 6.6% versus 2019, compared with last week's -7.1%.

International seat capacity is down by 14.3% versus 2019, compared with last week's -15.5%.

Europe: percentage change in weekly airline seat capacity vs equivalent week of 2019, weeks commencing 06-Jan-2020 to 10-Oct-2022

 

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

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

With capacity down by 12.5%, Europe is 10.4ppts better than sixth placed Asia Pacific, where capacity is down by 22.9%, but 1.7ppts below the Middle East, where seat count is down by 10.8%.

Capacity is down by 7.5% in North America, by 6.2% in Africa, and by 3.2% in Latin America.

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

North America is broadly level on last week.

Percentage change in passenger seat capacity vs 2019 by region, week of 30-Mar-2020 to week of 10-Oct-2022

 

Europe's 4Q2022 capacity is projected at 87% of 2019 levels (the same as 3Q2022)

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 is continuing in 2022 so far. Capacity for 1Q2022 was 74% of 1Q2019 levels, while 2Q2022 was at 84% and 3Q2022 was at 87%.

Looking at 4Q2022, the projection is 86.9% – virtually unchanged from 87.0% last week, and very close to the 3Q outturn.

Aug-2022: European airline load factors are widening the gap to 2019 levels

The latest monthly traffic data from IATA indicate that European airlines' load factor reached 86.2% in Aug-2022. This down by 0.8ppts month-on-month from the 87.0% recorded for Jul-2022, when Europe load factor was the highest level since before the pandemic.

Perhaps more significantly, the Aug-2022 load factor was 2.9ppts below the Aug-2019 level – the second successive month of a widening gap between 2022 load factors and those of the equivalent month of 2019.

The gap to 2019 load factors had narrowed from 10.0ppts in March to 5.7ppts in April, 3.0ppts in May and 1.5ppts in Jun-2022.

However, it widened to 2.1ppts in Jul-2022 and is now 2.9ppts in Aug-2022.

European airlines: monthly passenger load factor (percentage), 2019 to 2022

 

Sep-2022: Ryanair, Wizz Air and Norwegian are widening the load factor gap to 2019's

There is always a lag in the reporting of industry-wide traffic data, so Sep-2022 figures are not yet available.

Nevertheless, the few leading European airlines that still report monthly – all of them LCCs – give us some idea of how the trend may be turning.

Over a number of months up to Jul-2022, each of Ryanair, Wizz Air and Norwegian had reported both month-on-month load factor gains and a narrowing of the gap to their 2019 load factor levels. 

However, there was no further narrowing of the load factor gap to 2019 levels in their Aug-2022 data.

Norwegian managed to exceed its Jul-2019 load factor in Jul-2022 by 1.0ppt, helped by having much less capacity than in 2019. However, Norwegian's Aug-2022 load factor of 85.5% was 4.5ppts below Aug-2019, and its Sep-2022 load factor of 85.2% was 4.7ppts below Sep-2019.

Ryanair's Sep-2022 load factor of 94% was 2ppts below its Sep-2019 load factor, and Wizz Air's 87.1% was 7.4ppts short of the same month three years ago.

For both Ryanair and Wizz Air, the load factor gap to 2019 in Sep-2022 was wider than in Aug-2022.

Ryanair, Wizz Air and Norwegian Groups: passenger load factor (percentage), 2022 vs 2019 for Jun-Sep

 

Operational and economic concerns have halted the load factor recovery in Europe

Both Ryanair and Wizz Air are operating at more than 100% of 2019 capacity levels this summer. Moreover, both have been carrying more passengers each month than they did in the equivalent month of 2019.

Nevertheless, as for Aug-2022, the drop in their load factors versus 2019 in Sep-2022 shows that even these high traffic levels are still not quite enough to fill their expanded capacity.

As was the case for Aug-2022, LCC load factor trends for Sep-2022 may be an indicator that the gap to 2019 levels is continuing to widen at a sector level across Europe's airlines.

As CAPA has previously observed, the difficulty in fully recovering to pre-pandemic load factors is no longer a function of COVID-19 concerns.

Rather, it is now driven more by operational constraints and uncertainties over the economic outlook.

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