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European aviation: staffing adds to the list of challenges

Analysis

Europe's aviation capacity recovery has absorbed the Omicron wave and the Russian invasion of Ukraine, but now risks stalling on recruitment obstacles.

Reduced COVID-19 restrictions and seasonally higher demand since the start of the summer schedule have led to a +66% increase in weekly seats since late Jan-2022.

However, expressed as a percentage of 2019 levels, the recovery has lost momentum in recent weeks.

Europe's seat capacity shortfall of -18.4% versus 2019 levels is its third best week on this measure since before the COVID-19 pandemic, but is fractionally down from last week's figure.

Europe has slipped from fourth to fifth in the regional ranking, above only Asia Pacific, where capacity is down by -31.3%. Middle East capacity is down by -15.1%, while Africa capacity is down by -14.5%, North America by -11.4%, and Latin America by -6.8%.

Summary

  • Europe has 26.4 million seats this week, down -18% vs 32.3 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 is projected at 86% of 2019 levels, and 3Q2022 at 92%.
  • Reduced COVID restrictions have driven the aviation capacity recovery, but recruitment challenges are causing another pause.
  • UK consumer confidence plunge raises fears of economic downturn.

Europe has 26.4 million seats vs 32.3 million this week in 2019, down -18%

In the week commencing 25-Apr-2022, total European seat capacity is scheduled to be 26.4 million, according to OAG schedules and CAPA seat configurations. This is 18.4% below the 32.3 million seats of the equivalent week of 2019.

This is 0.3ppts below last week's result, but within 1.2ppts below of four weeks ago, when capacity was down by -17.2% compared with the equivalent week of 2019. That was its highest level since before the coronavirus pandemic.

This week's total seat capacity for Europe is split between 6.8 million domestic seats, versus 7.6 million in the equivalent week of 2019; and 19.5 million international seats, versus 24.8 million.

The modest decline in total capacity as a percentage of 2019 levels this week has been driven by domestic markets.

Europe's domestic seats are down by -9.5% versus 2019, compared with last week's -11.2%.

International seat capacity is down by -21.1% versus 2019, compared with last week's -20.2%.

Europe: percentage change in weekly airline seat capacity vs equivalent week of 2019, weeks of 06-Jan-2020 to 11-Apr-2022

 

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

Europe has dropped from fourth to fifth in the ranking of regions measured by seats as a percentage of 2019 levels this week.

Middle East has jumped to fourth, leaving only Asia Pacific below Europe.

With capacity down by -18.4%, Europe is 12.9ppts better than Asia Pacific (where capacity is down by -31.3%) but is now 3.3ppts below the Middle East, where seat count is down by -15.1%.

Capacity is down by -14.5% in Africa, by -11.4% in North America, and by -6.8% in Latin America.

Asia Pacific, Latin America and the Middle East have taken upward steps in the trend this week, while all other regions are broadly flat on last week.

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

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Europe's 2Q2022 capacity is projected at 86% of 2019 levels and 3Q2022 at 92%

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, 18% in 2Q2021, 64% in 3Q2021 and 71% in 4Q2021. Capacity for 1Q2022 was 74% of 1Q2019 levels.

Capacity for 2Q2022 is currently projected at 86.2% of 2Q2019 levels, which is only a modest downward revision from 86.6% a week ago. 3Q2022 is projected at 92.2% of 3Q2019 seat numbers, and that is little changed from 92.5% projected a week ago.

Reduced COVID restrictions have driven the aviation capacity recovery…

Europe remains close to its highest post-crisis levels of weekly seats expressed as a percentage of the equivalent week of 2019. The recovery from 2Q2021 to 4Q2021 was partly reversed in Jan-2022 by the Omicron (variant of the coronavirus) wave, but capacity then recovered once more.

The Russian invasion of Ukraine in late Feb-2022 caused the recovery to pause until late Mar-2022.

Weekly capacity in Europe reached a high of 83% of 2019 levels at the start of the summer season in late Mar-2022; the main driver of this recovery has, of course, been the reduction in COVID-related restrictions in many leading markets in Europe, particularly during Mar-2022.

…but recruitment challenges are causing it to pause

However, there now appears to be another pause in the recovery.

This is probably less to do with the ongoing war in Ukraine and more to do with operational problems experienced by some airlines as they expand into the higher-demand summer schedule.

As noted above, 2Q2022 capacity is now projected at 86.2% of 2Q2019 seat numbers.

While this is not very different from last week's projection of 86.6%, it is 5.0ppts lower than was projected in late Feb-2022.

COVID-19 Stringency Index* (Jan-2020 to Feb-2022): US, Italy, Canada, Germany, UK and France

 

All Europe's airlines cut their workforces significantly during the worst phases of the pandemic in order to cut costs and survive. A combination of reduced travel restrictions and seasonal demand increases has meant a big increase in operations in recent weeks.

Weekly seat capacity in Europe has grown from just under 16 million in late Jan-2022 to more than 26 million this week – an increase of +66%.

However, a number of airlines have experienced some difficulties in expanding their workforces fast enough to accommodate the growth.

Even when recruitment processes keep up, there have been instances of delays in government security clearance for new recruits (to airports, airlines and immigration services) and also material numbers of personnel reporting positive COVID-19 tests as a result of the reduction in restrictions.

UK airlines and airports face the additional challenge of a more restricted recruitment pool since Brexit. EU nationals once formed a significant share of recruits into UK aviation – not only adding numerically to the number of candidates, but also bringing language skills.

The UK is Europe's largest aviation market and it has also led with the cutting of travel restrictions.

No doubt its aviation industry will iron out the wrinkles in its recovery and, to give some perspective, flight cancellations resulting from staffing issues represent only a small (single digit) percentage of total operations.

UK consumer confidence plunge raises fears of economic downturn

Nevertheless, an additional note of caution came in the form of the UK's consumer confidence index for Apr-2022. The measure of how consumers see their own finances and the wider economy fell to -38 in Apr-2022, and that is its lowest level since 2008.

Concerns over the soaring cost of living are now raising fears of another economic downturn.

Aviation has managed to survive the pandemic that caused its worst ever crisis and appears to be riding out the Russia-Ukraine conflict. Nevertheless, these events have left severe bruises.

European aviation could do without the possibility of an economic slump in the continent's largest aviation market.

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