Industry Intelligence – catch up on CAPA’s exclusive market analysis insights

Each week, CAPA – Centre for Aviation, produces informative, thought provoking and detailed market analysis of the aviation industry. With supporting data included in every analysis, CAPA provides unrivalled and unparalleled intelligence. Here’s some of the reports published over the past week.


CAPA Outlook: How can we expect a sustainable industry built on junk bonds?

The global aviation industry, savaged by the effects of Covid-19, today resembles a hopeless drunk, lurching towards the next crisis. This is the raw assessment of the present reality according to CAPA Founder and Executive Chairman, Peter Harbison, in his upcoming monthly outlook presentation in the Apr-2021 edition of CAPA Live.

“Even the US airline majors – who operate inside a protected domestic market that has delivered higher profits than the rest of the world combined in recent years up to 2019 – have been bailed out three times and most have gone through Chapter 11 reincarnation since 2000”, said Mr Harbison.

“This is clearly not a financially viable industry, yet with government support airlines are about to re-embark into an environment that is much more hostile than the ones which preceded COVID-19. Things need to change, even just to remain the same”, he said.

The Apr-2021 edition of CAPA Live carries the theme “Airlines in Transition” and examines the evolution of airline business models and the factors, including technology, that are driving change.

TO READ ON, VISIT: CAPA Outlook: How can we expect a sustainable industry built on junk bonds?


European aviation travel restrictions keep demand pent-up

Projected Jul/Aug-2021 capacity in Europe has been increased again this week, although summer bookings are weak and slow COVID-19 vaccine rollout means that case numbers are still high.

Meanwhile, seat capacity in Europe remains heavily depressed, at 71.7% below 2019 levels in the week of 12-Apr-2021, which is 1.1ppts worse than a week ago.

Moreover, the 20.5ppt gap to the next worst region is the widest of the pandemic. Middle East capacity is down by 51.3% versus 2019, Africa by 50.8%, Latin America by 46.5%, North America by 37.8%, and Asia Pacific by 29.7%.

There is evidence of pent-up demand in Europe, but demand is a lesser variable than restricted supply. Europe has the second highest levels of restrictions on international travel (only a little less than Asia Pacific, source: IATA), but its airlines have the highest dependency on international capacity.

The UK is due to give more details of its planned ‘traffic light’ approach to reopening international travel, scheduled to be in early May-2021. The UK is ahead of the rest of Europe with vaccinations and in bringing down infection rates, and its approach will no doubt be scrutinised by others.

TO READ ON, VISIT: European aviation travel restrictions keep demand pent-up


First airports outside China report year-on-year passenger gains

More than a year after the coronavirus pandemic was declared, the first airports outside China – where a large-scale domestic aviation recovery has been under way for two months now – have reported passenger traffic gains. The ‘+’ sign for passenger growth had been cancelled for a year and many must have thought they might never see it again.

The data is not mind-blowing because for the most part, the growth is coming almost exclusively out of the domestic segment, which most commentators expected to revive first.

But in instances where there has only been 2% growth in the international segment, that at least offers hope that there is a corner to be turned.

TO READ ON, VISIT: First airports outside China report year-on-year passenger gains


COVID surges create hurdles for South American airlines

Recovery from the COVID-19 pandemic in South America has stalled as the region’s largest country, Brazil, is experiencing a surge of infections and deaths. Elsewhere, Chile has closed its borders for a month and Argentina has also instituted restrictions.

The region’s airlines expected some setbacks during the recovery from the crisis, but the latest rise in infections is creating new layers of uncertainty for some operators that just a few months ago believed the worst was behind them.

There are also longer term effects for those countries experiencing setbacks in managing the COVID-19 crisis. The longer their respective borders remain closed off, the further out a full recovery in international travel will be pushed, which will ultimately prolong a full recovery in air travel demand.

TO READ ON, VISIT: COVID surges create hurdles for South American airlines


European airlines: summer capacity ramp-up looks very speculative

For the first time during the coronavirus pandemic, projected European capacity derived from airline schedules three to four months into the future has been increased this week. This is in spite of Europe’s continued underperformance against other regions on seat count compared with 2019 levels, its high COVID-19 case numbers, and its slow vaccination rollout (the UK excepted).

Europe’s seat capacity is down by 70.6% from 2019 levels in the week of 5-Apr-2021 – unchanged from a week ago and still way behind other regions.

Versus capacity in 2019, Middle East capacity is down by 52.9%, Africa by 51.3%, Latin America by 45.2%, North America by 36.4%, and Asia Pacific by 29.7% (the first region to rise above the -30% threshold).

European capacity in Apr-2021 is projected to remain around -70%, but OAG schedules then ramp up to within 21% of 2019 for Jul-2021 and Aug-2021. Moreover, capacity for those two peak summer months is up by a few percentage points compared with schedules filed last week.

In the absence of any clarity over the lowering of barriers to international travel, and with the EU Digital Green Certificate still unproven, this looks very speculative.

TO READ ON, VISIT: European airlines: summer capacity ramp-up looks very speculative


CAPA Live: China’s domestic aviation recovers; but not international

Each CAPA Live, held on the second Wednesday of each month, contains a summary of the latest key developments by region. In the Apr-2021 report: following months of rapid recovery in the second half of 2020, China’s recovery experienced setbacks entering 2021; Chinese airlines expected to remain in the red in 1Q2021, due to the missed opportunity during the Lunar New Year, when citizens were strongly encouraged to stay put; second wave of recovery under way as demand, load factor and airfares on upward trajectory; and international market will remain largely closed off as vaccine rates and effectiveness remain below expectation.

TO READ ON, VISIT: CAPA Live: China’s domestic aviation recovers; but not international


Brazil’s airlines remain upbeat despite softening demand

Throughout much of 2020 Brazil’s airlines touted a swift recovery in domestic air travel demand, and were bumping up towards their 2019 capacity levels by the end of 2020. But now the rebound has lost steam as Brazil fights a searing second wave of COVID-19 infections.

Two of the country’s airlines – GOL and Azul – believe the stalled momentum in demand is temporary, and view vaccinations as the key catalyst for the recovery in domestic air travel demand to resume.

Of course, efficiently administering vaccines rests squarely on the shoulders of Brazil’s government, which recently has been under fire for its management of the COVID-19 pandemic.

TO READ ON, VISIT: Brazil’s airlines remain upbeat despite softening demand


U.S.’ Infrastructure plan needs P3s for airports to make a difference

Successive U.S governments have been unveiling stimulus packages and infrastructure plans since the emergence of the coronavirus pandemic, and those now total more than USD6 trillion.

The airport sector has been a recipient, but of only USD33 billion in 2021, including from the latest proposal, which is still to be ratified. That sector says it needs US115 billion now.

It is clearly not a priority for this administration but surprisingly has been, at least comparatively, under the previous one.

The private sector could help fill the gap and the interest is there. But further changes are needed to regulation to enable that sector to play its part fully.

TO READ ON, VISIT: U.S.’ Infrastructure plan needs P3s for airports to make a difference

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