Global airline capacity plummeted; 21 million seats were cut in seven days, a 24% reduction; the COVID-19 pandemic spread; and markets around the world collapsed.Today, worldwide capacity has stabilized at 82 million seats per week, a slight improvement over the previous week but still 22% lower than the same week in 2020 (albeit for the optimistic, that is a 39% gain over this time last year). Things appear to be moving in the right direction, but as we thought, the road to recovery will be paved with bumps along the way, possibly caused by unexpected events.
Last week, we noted that forward-looking airline capacity is expected to rise rapidly over the next three months. However, data released this week reveals that airlines around the world are reducing capacity to reflect the impact of sanctions; roughly 16 million tickets have been withdrawn since the end of May, a 1% decrease.
There has been movement, particularly in Central and Eastern Europe, where airline capacity has declined by 9%. With an additional 350,000 seats added this week, North America remains the single largest region, and with North East Asia falling behind by 550,000 seats, the gap between the two regions has expanded to 4.2 million seats, the widest since the COVID-19 pandemic began.
Some areas have seen tremendous improvement in comparison to 2021; Western Europe, for example, is up +254 percent on the same week last year, now at 14.9 million compared to just 4.1 million a year ago, despite the fact that the region is still down-28 percent on the same week in 2019.
Further than the regional overview, we’ve looked at the countries and airline markets that are still battling to recover, and the comparison to a “typical” week in 2019 provides some intriguing insights into how far some areas still have to go on the road to recovery. Most of those Asian markets may see a notable rise in capacity in the coming weeks; Malaysia will reopen on April 1st, and the national airline is already proposing twice daily flights to London Heathrow – assuming there is enough demand, that is!
Six European countries are also on the list of twenty, with Sweden being the most impacted, with capacity levels only half of what they were in 2019, and Finland similarly impacted at -46 percent, due to recent events affecting some of their prospective traffic and routings to Asia. Finnair is still flying to Seoul Incheon and Tokyo Narita this week, but with longer journey durations and different routes than usual; AY73, a regular scheduled service, took 12:50 last week, compared to a more normal 8:30 a few weeks ago.
At the start of the epidemic, certain countries’ markets shifted their capacity balance, putting a greater focus on domestic airline capacity. China is an excellent example, where domestic airline capacity was 20% higher in March 2021 than in March 2019. However, growing domestic capacity has not compensated for the loss of foreign capacity in some countries. Japan is an example of a country where 86 percent of overseas capacity has yet to return, and with insufficient testing resources, reopening the market is still a long way off.China, on the other hand, is the world’s most “closed” market, with only 7% of its regular capacity operational this week.
As we continue to assess the impact on airlines, we’ve set a minimum operational criterion of 300,000 seats on the data for the week of March 11th, 2019, to ensure that we don’t miss any of the extremely small carriers that have had even higher capacity cutbacks than those listed below. Those carriers may not be on the list, but they haven’t been forgotten! Thai International, surprisingly, has the highest capacity gap compared to 2019 levels, as the country battles to rebuild capacity and important source markets such as China and Hong Kong effectively shut down.
Both Garuda and Cathay Pacific, two very significant Asian carriers, have seen similar capacity reductions and, in terms of absolute seats now on sale, are at similar levels. Nonetheless, the recovery for both airlines remains dubious.
Many airlines changed their networks and adjusted their tactics as a result of the epidemic, partially as a result of the immediate impact on their company, but in some cases, as a reason to expedite a strategic change that was already happening. One such scenario is in the United Arab Emirates, where Etihad was already changing its operations; the carrier’s capacity is only half of what it was in 2019, whereas Emirates, which may have less fleet flexibility than Etihad, is only half of what it was in 2019.
Jet2, which is 16 percent above capacity for 2019, is another example of carriers in the same market recovering at different rates. Ryanair is 90 percent above capacity, Virgin Atlantic is 78 percent, easyJet is 77 percent, and British Airways is 67 percent.Of course, filling all of those seats is more essential than the capacity number, but those figures show how rapidly LCCs have recovered from their capacity deficits when compared to legacy carriers.
Therefore, this week’s data indicates a tiny increase in numbers, and while we’ve been focusing on those areas that have yet to see any substantial recovery, things are starting to turn around in many of those countries. Capacity will always change from week to week, and airlines will always adapt their operations dependent on demand, but many markets appear to be recovering as we enter the second quarter of the year.
