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Europe's airlines are now better matching supply to demand

Analysis

Europe's capacity recovery as a percentage of 2019 levels remains on the plateau it has occupied since the last week of May-2022. This appears to be helping an improving load factor trend.

Europe's total seat capacity is at 87.1% in the week commencing 8-Aug-2022, which is a shortfall of -12.9% against the equivalent week 2019.

Europe remains fourth in the regional ranking, above Asia Pacific, where capacity is down -21.6% versus 2019, and the Middle East, where capacity is down -14.0%.

IATA data show that European airline load factor was 86.0% in Jun-2022, only 1.5ppts short of the Jun-2019 level. The gap to 2019 load factors has narrowed every month since Apr-2022 and the trend has been broadly improving for more than a year.

The capacity recovery may have lost momentum, but load factor gains show that supply is now more closely balanced with demand.

Summary

  • Europe has 32.1 million seats this week – down -13% vs 36.8 million in the same week of 2019. Europe is fourth 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 87% and 4Q2022 at 86%.
  • European airline load factors continued to improve in Jun-2022.
  • Ryanair, Wizz Air and Norwegian load factors improved further in Jul-2022.

Europe has 32.1 million seats vs 36.8 million this week in 2019 – down -13%

In the week commencing 8-Aug-2022, total European seat capacity is scheduled to be 32.1 million, according to OAG schedules and CAPA seat configurations.

This is -12.9% below the 36.8 million seats of the equivalent week of 2019, and a very slight deterioration of 0.1ppts from last week's (01-Aug-2022) -12.8%.

Europe has been stuck in a narrow range between -12.5% and -14.4% since late May-2022, a period of 12 weeks.

This week's total seat capacity for Europe is split between 7.6 million domestic seats, versus 7.9 million in the equivalent week of 2019; and 24.5 million international seats, versus 28.9 million.

Europe's domestic seats are down -4.1% versus 2019, equal with last week, as the strongest performance for the domestic market since the start of the pandemic.

International seat capacity is down -15.3% versus 2019, compared with last week's -15.1%.

Europe: percentage change in weekly airline seat capacity vs equivalent week of 2019, weeks commencing 06-Jan-2020 to 01-Aug-2022

 

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

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

With capacity down -12.9%, Europe is 8.7ppts better than sixth placed Asia Pacific, where capacity is down -21.6%, and 1.1ppts above the Middle East, where seat count is down -14.0%. Capacity is down -9.7% in North America, -9.2% in Africa, and -3.6% in Latin America.

North America, Latin America, Middle East and Africa have taken upward steps in the trend this week, while Europe and Asia Pacific are broadly stable on last week.

Percentage change in passenger seat capacity vs 2019 by region, week of 30-Mar-2020 to week of 8-Aug-2022

 

Europe's 3Q2022 is projected at 87%; 4Q2022 at 86%

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 and 2Q2022 was at 84% of 2Q2019 levels.

Projections for 3Q2022 are at 87.1% of 3Q2019 seat numbers, which is very slightly down from the 87.2% projected last week. The projection for Aug-2022 is stable at 87.0%, while Sep-2022 has been trimmed from 87.8% to 87.3%.

Looking ahead to 4Q2022, the final quarter of the year is projected at 86.0%, compared with 86.4% projected last week.

It seems that schedules for the rest of 2022 are slowly being trimmed to bring them in line with the 86% to 87% range of the past 12 weeks.

European airline load factors continued to improve in Jun-2022

The trimming of schedules to keep capacity at around 86% to 87% of 2019 levels has had a beneficial impact on load factor, as previously highlighted by CAPA.

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

Indeed, the latest monthly traffic data from IATA – for Jun-2022 – indicate that European airlines' load factor is closer to pre-COVID levels than at any time since before the coronavirus pandemic.

In Jun-2022 Europe's passenger load factor was 86.0% – just 1.5ppts below the Jun-2019 level of 87.5%. This gap to 2019 load factors has narrowed from 10.0ppts in March, 5.7ppts in April and 3.0ppts in May.

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

 

Ryanair, Wizz Air and Norwegian load factors improved further in Jul-2022

Industry-wide traffic data are not yet available for Jul-2022, but the few leading European airlines that still report monthly – all of them LCCs – have shown further load factor improvements.

Each of Ryanair, Wizz Air and Norwegian have reported month-on-month load factor gains in recent months. Moreover, the gap to their load factor in the equivalent month of 2019 has narrowed.

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

Norwegian even exceeded its Jul-2019 load factor in Jul-2022 by 1.0ppt, although its capacity is considerably smaller than it was in 2019 (only 60% in the week of 8-Aug-2022).

By contrast, Ryanair is at 115% and Wizz Air at 128% of their 2019 seat capacity this week, and both were at broadly similar levels in Jul-2022. In spite of this strong growth, Ryanair was within 1ppt of its Jul-2019 load factor in Jul-2022 and Wizz Air was only 5.9ppts short.

Moreover, in Jul-2022 both reported more passengers than they had ever carried in a single month.

Ryanair had 16.8 million passengers and Wizz Air had 4.8 million.

Europe's airlines are now better matching supply to demand

Trimming of capacity in recent weeks, relative to what had been planned for the summer earlier in 2022, has been driven by labour shortages and other supply chain constraints.

Going into the summer season, Europe's airlines were scheduling more capacity than the aviation industry could operate with sufficient staff numbers. Moreover, the shortfall in passenger load factor to 2019 levels in the early summer period suggests that capacity was also being scheduled in excess of demand.

However, the improving load factor trend indicates that Europe's airlines are now better matching supply to demand.

The capacity recovery relative to 2019 levels is tracking sideways, but airlines will be hoping that load factors can match or exceed 2019 levels in the summer peak.

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