Europe's aviation recovery is not keeping pace with economic activity

The IHS Markit Purchasing Managers' Index, a widely used indicator of economic activity, has recovered from record lows in Apr-2020. The UK index has even reached its highest level since Oct-2013. The Eurozone index is down versus Jul-2020, but is above pre-pandemic levels.

Historically, the PMI was a reliable lead indicator of air traffic growth. This held in the early period of the crisis as both collapsed. However, Europe's airline capacity recovery is not keeping up with the economic recovery signalled by higher PMIs (and traffic is not matching capacity).

Europe's airline seat numbers have been hovering around 45% of 2019 levels for four weeks now. The year-on-year cut of -55.2% in the week commencing 24-Aug-2020 is actually slightly deeper than the previous week's -55.0%. The difference is fractional, but it is the first downward movement in 12 weeks.

Europe's cut is still deeper than North America's -51.6% and Asia Pacific's -43.3%. Latin America has the deepest cut, -72.3%, followed by Africa's -67.9% and the Middle East's -67.3%.

For aviation recovery in Europe, as elsewhere, travel restrictions and biosecurity concerns outweigh economic drivers.