It was only ever likely to be for a week, but China has snatched back the title of the world’s largest aviation market from the United States with a stellar 32% increase in capacity week on week and a more modest 4% growth in the last two weeks. Total weekly capacity is now back at 52.6 million although that only takes us to just above half the capacity levels reported before Covid-19.
Wow, where did that come from! A near 27% reduction in capacity and the loss of over 3.2 million domestic seats in one week has handed the United States the title as the world’s largest aviation market something no one probably expected. It may be a short-lived gift from China as part of their New Year festivities but nevertheless a dramatic turnaround in just seven days.
Often referred to as the world’s largest mass migration, Chunyun, or the Spring Festival, can see as many as 3 billion trips being made in a more normal year. Coinciding with student breaks, and benefitting from a week of public holidays, vast numbers of students are joined by migrant workers and others returning home to spend time with their family. In more recent years, the Spring Festival is also a time when many have chosen to go on vacation, or return from overseas, causing a spike in both domestic and international air travel.
Another dire week for global aviation with more lockdowns, sudden suspensions of services and the threat of having to stay in a quarantine hotel at Heathrow looming for anyone brave enough to want to enter the United Kingdom. Can things get any worse; probably but let’s hope not and try to stay positive.
The Tokyo Olympics didn’t happen in 2020 and now the question is will they happen in 2021. Obviously, the primary concern for the organisers is the risk of spreading covid-19, but to what extent does the event also rely on the world of global aviation being at least partially recovered.
Fifty-two weeks ago, we wrote a short blog highlighting some of the regional capacity changes in Asia as a result of a small, localised outbreak of a new virus. At the time we thought that there could be some impact on global aviation, perhaps like a SARS or Ebola time impact. We were so wrong! A year later and we are reporting on what has become the single most destructive event in aviation history; it has to end soon, surely?
The flattest seasonal holiday season has been reflected in the latest global capacity which has broadly remained around sixty million seats a week since the middle of December. The early Christmas present of breaking that sixty million, was just that, a present and this week’s 59.6 million is perhaps likely to be as good as we can expect in the next few weeks.
It’s hard to believe that Beijing’s newest airport has been open for a year already. And what a year it has been for the industry – certainly not one that any airport would have wished for in it’s inaugural year. We know however that China’s domestic air market has recovered from the COVID crisis, at least in terms of capacity – and in the month of November, domestic capacity was 10% above November 2019 levels.
Since the week commencing the 5th October the US market has reflected a very different trend pattern to the rest of the world as the chart below highlights. Whilst the rest of the world has seen a steady decline in capacity and is now 9 points lower than at the beginning of September, the United States has seen a thirteen-point improvement; a twenty-two-point swing to use pollster terminology.
If you have over 100 aircraft scheduled for delivery in 2020/21 and a further 106 that are currently inactive then you have plenty of capacity. But where do you operate those aircraft? Southwest seems to have found part of the solution with their recent announcement of entering the Chicago O’Hare (ORD) and Houston Intercontinental (IAH) markets from early next year.
Traditionally the next week is one of the most impressive displays of the success of the airline industry, the Big Three US carriers announce their third quarter earnings which cover the July to September period; the peak months of travel in many markets. Last year United Airlines reported net income of US$1.0 Billion, Delta Air Lines adjusted revenues of US$12.6 Billion and American Airlines paid some US$44 million in dividends in the quarter.
In the week that some 32,000 aviation professionals’ careers were placed at risk in the United States as the CARES Act expires, it feels like a really flat week for what is a great industry. It seems that this week’s capacity data reflects what is probably one of the most depressing weeks of the Covid-19 crisis; we knew those furloughs were coming but just hoped that they could be avoided, perhaps they still can.
The transatlantic for many airlines is a very lucrative source of revenue and with the IATA Winter Season now four weeks away we’ve looked at the typical revenue generated across the season. However, since Covid-19 was already bugging demand in January we’ve used Winter 2018/19 as a reference point.
Throughout 2020 scheduled airlines have been looking for glimmers of hope in a recovery, but it looks like the last hope of the year Thanksgiving will be memorable this year for all the wrong reasons. The summer season saw a small spike in demand and then a rapid settling back to the new normal demand levels; labour day showed a similar pattern and the end of year holiday currently looks like being worse than both of those events.
In the week that Qantas introduced flights to nowhere that sold out in ten minutes it is perhaps no surprise that scheduled airline capacity also went nowhere significant in the last week. Although we have slipped below the 57 million weekly seat market to 56.9 million, week on week capacity is only down by some 98,000 seats which seems like a small victory given that this is the seventh consecutive week of declines. Maybe there is a future in flying to nowhere.
The first full week of September capacity follows the recent trend and we are now into the fifth consecutive week of capacity declines from what looks like the peak capacity week of the 3rd August. Project the current trend forward to the year end and global capacity will fall below 40 million in the last week of December; that will not be a happy Christmas for the airline industry. The last full week of December 2019 saw some 106.8 million scheduled seats, so we appear to be heading for less than half of global capacity by year end.
While the past four or five months have been tough times for airlines and airports, the same has been true for suppliers to the industry. An example of this is the fuel suppliers which are on standby, ready to refuel aircraft in their often-short turnaround time. Early on in the pandemic, as OAG frequently reported, airlines struggled to plan schedules around travel restrictions imposed at short notice and plummeting demand.
This week’s latest scheduled capacity data shows a further reduction with the loss of some 700,000 fewer seats reported this week. That’s a reduction of just one percent and exactly the same percentage of capacity at 50.6% of last year’s level as we reported for week thirty-one. This is now the third consecutive week of global capacity falling back; that seems like the beginning of a trend to me.
We may not have realised it at the time and it certainly didn’t feel that great, but last week’s global capacity may have represented the peak week for 2020 in the new world of Covid-19. Last week we broke through the 60 million mark; this week we are just below that point and although there are pockets of capacity growth around the globe there are also a number of new travel and rumoured travel restrictions dragging capacity down.
The past 30 weeks have seen the number of cancelled flights go through the roof as a result of the global pandemic, causing disruption to passengers, airlines and airports. Last week we looked at how airlines managed schedules during Covid. This week take a look the cancellation disruption and management at country level and how they got it under control.
