A ‘dire winter outlook’ is the prognosis for European aviation, according to CAPA’s new Air Capacity Models

1 July, 2020

A number of countries in Europe were hit particularly hard by the Covid-19 pandemic. The United Kingdom has recorded the largest number of fatalities - the third largest currently in the world - with Italy, France and Spain not too far behind. Together they have seen more 135,000 citizens die due to the spread of the SARS-CoV-2 virus.

All are now taking tentative steps to lift the heavy restrictions that were brought in to try and combat the spread, but localised lockdowns, as we have seen recently in both Germany and the UK to battle regional spikes, shows this is easier said than done against the invisible threat.

Talk of new travel corridors and the return - to some degree - of leisure travel may make you think that the worst has been passed. Perhaps it has? But the threat of second wave remains as strong. As we enter July, airlines have significantly boosted their schedules but respected aviation and travel intelligence specialist CAPA - Centre for Aviation affords a warning.

Its new editions of its Air Capacity Models warn that European aviation powerhouses, the UK, France and Germany, are each expected to recover to just 40% of 2019 airline capacity levels by the end of 2020.

The capacity projection provides breakdowns of each nation's domestic and international outlook for seat capacity, supported by OAG - as well as each city and route pair - based on the 2019 actual performance levels. Combined with government statements, airline network announcements and capacity projections, the model provides a robust and granular guide for future air capacity projection.

The research suggests airline capacity to and from Europe's biggest markets will struggle to recover. "Europe's big three aviation market leaders, the UK, France and Germany, are shadows of their former selves, and while some improvements are expected this summer - off very low baseline levels - the industry faces a challenging situation," explains Peter Harbison, founder and chairman emeritus, CAPA - Centre for Aviation.

"The summer peak European earnings season is in disarray and, as winter approaches, forward bookings will offer little comfort. The European marketplace remains highly fragmented, making it hard for airlines, travellers and surface providers to plan," he adds.

All three markets have strong international flows and their domestic recovery - which will precede any international upturn - will be influenced heavily by strong ground transport alternatives, especially in France where financial support to Air France has a requirement that is does not reintroduce some of its shorter domestic routes. But they are also home to aggressive LCCs which will are already driving international capacity recovery.

The UK saw weekly capacity exceed seven million seats this time last year, but it will only exceed the two million figure for one week in Dec-2020 according to the CAPA projection, based on anticipated recovery over the second half of the year.

CHART - Whereas UK weekly capacity in 2019 topped seven million seats, it is unlikely to exceed two million in 2020, projects CAPA's Air Capacity ModelsSource: CAPA - Centre for Aviation

Meanwhile, in Germany the international market overall is tracking at around 25% of 2019 levels, says CAPA: in France Dec-2020 will be down around 75%, albeit its larger domestic market than the UK and Germany, and this will feature more substantially in the industry's recovery.

These worrying projections highlight the need for governments to step up and act to create a platform for future growth. Right now 2021 promises to be a lot worse for the aviation industry than 2020 without a concerted joint effort from governments to support the sector.

"Airlines across Europe and globally are mortgaging the future in their efforts to keep cash flowing. All this is doing is putting band-aids on what is a gaping wound," explains Me Harbison. "What is needed is coordination. The price of inaction and continuing as before inevitably leads to protectionism, much less competition and far fewer people flying, and an industry which will be savagely uneconomic."

The CAPA Airline Capacity Model utilises a phased air capacity resumption scenario moving up from zero operations of grounded airlines; via skeletal networks (5% of operations) for emergency travel and repatriation to acutely restricted operations (25%) with the return of mission-critical business travel and acute VFR.

The next step is to basic commercial operations (50%) with a build up of business travel, motivated VFR/student travel and highly motivated leisure travel; then constrained operations (75%) with expanded business and VFR/student travel and motivated leisure travel; before hitting standard operations (100%) and the return of regular travel.

With their research the CAPA Air Capacity Models certainly provide a much better insight into how future air markets will look in terms of capacity than what the false image that airlines are currently offering through their advanced schedule filings. You can find out more about the product by contacting [email protected].