Global airline capacity continues to be stuck just below the 80 million weekly seat mark, with a modest increase in capacity taking us back to 79 million, thanks largely to capacity increases in North East Asia. It is now very unlikely that we will trend back above the 80 million mark this year, as airlines adjust schedules further and store whatever cash they have generated for the winter season. Total capacity to the year's end is currently standing at 3.7 billion seats compared to the 3.2 billion scheduled in 2020, a 15% increase in what was supposed to be the bounce-back year.
Despite the COVID-19 Delta Variant, holiday travelers hit the road Labor Day weekend, seeing more traffic congestion than last year. Some people assumed that Labor Day weekend travel would perhaps even be lighter than last year. Yet the latest data from the Labor Day holiday shows people still have a strong desire to get out of town. Travel was especially strong in Miami this Labor Day. Travel times were +11% higher than in pre-COVID 2019 and 15% higher than in 2020. Further, Miami saw a +34% increase in miles-traveled versus last year and saw a +30% increase in trips.
Whilst the popularity of some of the world’s busiest domestic airline routes remains undiminished during the pandemic, there has been a considerable shift in the international busiest airline routes. In August 2019, 8 out of 10 of the Top 10 busiest global international routes operated within Asia on key business trunk routes, typically operating with high daily frequency and catering to time-sensitive business travellers.
It is only September, but the challenges of surviving the forthcoming winter season were highlighted over the weekend by the collapse of Philippine Airlines, who filed for bankruptcy. It has been a sad but inevitable outcome for the carrier. The airline has 22 aircrafts of varying ages, sizes, engines, and conditions for sale before they relaunch in early 2022. Good luck to all the staff impacted by this development. This week also saw South African Airways confirm that they will relaunch on the 23rd of September after a fifteen-month break.
New research from ForwardKeys reveals that international flights to European destinations in July and August reached 39.9% of pre-pandemic levels. This is significantly better than last year (which was 26.6%) when the COVID-19 pandemic caused widespread lockdowns, and vaccines were not yet approved. However, the picture was very mixed, with some destinations doing considerably better than others. The outlook is also not improving, as bookings slowed towards the end of the summer period.
Occupancy fell by more than two percentage points to 61.0% for the week ending 28 August 2021. This was the fifth consecutive week with lower occupancy and the fourth straight week with an occupancy decline of more than two percentage points. More than 77% of all STR-defined markets in the U.S. reported lower weekly occupancy, and U.S. occupancy is now at its lowest level since mid-May as just 57% of hotels saw weekly occupancy above 60%—the lowest percentage in 14 weeks. Weekday and weekend occupancy have each been trending down for the past five weeks.
ForwardKeys reveals that summer in Spain was exactly how it was predicted to be – international arrivals into Spain in July-August were half of 2019 levels. Spain managed to recover half of the volume of pre-pandemic internationals, down by 49.4% in 2019. On the flip side, domestic tourism was almost at pre-pandemic levels, covering for the loss of international visitors and three Spanish cities made it into the top 10 most resilient European cities list: Ibiza, Palma de Mallorca, and Malaga.
Some cruise lines, including Norwegian and Royal Caribbean, have started setting sail again after being on hiatus throughout the pandemic. The cruise industry is one of the many areas within the travel sector—such as airlines, rental cars, and hospitality—that have been rebounding over the summer. Royal Caribbean and Viking River Cruises in particular have captured market share in the two years from July 2019 to July 2021. However, despite a recent uptick, sales for the cruise line industry remain far below pre-pandemic levels.
India’s progressive approach to vaccinations has led to an increase in travelers and hotel demand, especially in the leisure segment. Beyond the noticeable improvement, however, the country is showing a different trend in which markets are regaining occupancy. As noted in a recent press release, India’s recovery after the first COVID-19 wave was concentrated in leisure destinations such as Goa and Udaipur. But in this latest round of recovery, heavily populated markets and metro cities such as New Delhi and Mumbai have seen much improvement.
Since the first week of August, airlines around the world have cut back their planned capacity by some 100 million seats. Assume in normal times 80% of those would have been filled at an average yield of US$200, that’s US$20 billion of revenues airlines had “hoped” to see that isn’t going to happen. These numbers are before the EU recommendation to limit US traveller access, partly because of the Delta variant raging in the US, but perhaps more out of frustration at the lack of reciprocity from the US authorities.
Global hotel performance is improving month by month. That’s the good news. The more pressing concern is if it will remain that way. The hotel industry remains fragile, dodging each and every new impediment thrown its way. The newest snag has been the Delta variant, which has caused COVID cases to spike in many areas and thrown a wrench into the gradual rebound. Just this week, the European Union recommended that Americans be banned from nonessential travel to its member states after a rise in case counts in the U.S.
With surging COVID-19 infection rates and most schools now back in session, it’s not surprising that U.S. hotel occupancy continued to dip in the latest week of reporting (15-21 August 2021). Occupancy, down to 63.7% in the most recent seven-day period, has fallen by two percentage points or more in each of the past three weeks. On a total-room-inventory basis (TRI), which accounts for temporarily closed hotels, weekly occupancy was 61.3%. While increased COVID-19 cases are likely affecting demand, most of the loss appears to be seasonal due to the return of in-person schools.
For a while I imagine many of us assumed this would be so: The more people were vaccinated the more we’d be able to fly where we want. However, the data seems to show that it isn’t quite that simple. At OAG we’ve been looking at the correlation between vaccination rates by country and international air capacity for each country relative to where capacity was two years ago. What we see is that vaccination rates in and of themselves are not a guide to how easy international air travel is.
The travel industry was one of the hardest hit over COVID, but foot traffic trends indicate that the sector has been gradually rebounding since the beginning of the year. With August in full swing, we dove into the data for some of the nation’s major hotels chains and airports to get a sense of where the travel recovery stands today. Air travel is still very much complicated by COVID, with safety precautions still causing flying to be much more burdensome than it was pre-pandemic.
The ups and downs of aviation’s recovery continued this week with capacity increasing back up to 78.9 million seats a week, a modest increase of 0.7% and over half a million seats added. Is that growth cause for optimism? Well, at the beginning of July airlines were planning to operate some 93.3 million seats so reduced operational capacity by some 15% in the space of seven weeks before travel as they matched capacity to available demand. Key markets such as the US, Europe and China to virtually anywhere remain locked with no sign of anyone wishing to reopen their borders.
It’s fair to say that the airline industry has never experienced a pandemic such as Covid-19, a near global lockdown, record industry losses, no clarity about reopening requirements and a nasty virus that has now reached a Delta variant...let’s hope it doesn’t get to a United variant! In a bizarre way, Covid-19 has been both an interesting experiment and allowed airlines to transition with words such as “pivot” and “unprecedented” frequently used, and it has created some hopefully never to be repeated moments.
With the help of summer vacation, Mainland China’s overall hotel occupancy rate showed a good upward trend in July, with the second and third week of the month reaching 2019 levels. Average daily rate (ADR) was even stronger, and when indexed to 2019, remained stable at roughly 110—meaning it was well above 2019 levels. As a result, Mainland China’s revenue per available room (RevPAR) index climbed from 87 at the beginning of the month to 117 by the end.
Regions around the world continue to see increased pandemic-related challenges, with the situation varying greatly by country. Fortunately, more than 4.6 billion doses of coronavirus vaccines have been administered in more than 190 countries, providing the tourism and hospitality industry a much-needed confidence boost, especially during the current summer months. However, with the increase in cases in many parts of the world resulting in new and extended restrictions, as well as the emergence of new virus variants, predicting future travel demand remains challenging.
The news that China shut down much of its domestic aviation market at the beginning of August in response to another wave of COVID, seemingly triggered by an infected passenger who arrived from Moscow into Nanjing Airport, does not bode well for other Asian countries battling to shift from crisis to recovery mode. The Nanjing outbreak has now spread to 17 provinces across China and takes place during the peak period for domestic leisure travel.
The start of the 2021-2022 academic year is coming soon. ForwardKeys and Dragon Trail International look at the strong correlation between Chinese flight booking trends and travel restrictions for students, alongside student-focused promotions from international airlines. With outbound tourism from China still on hold, international airlines have turned their attention to one group of Chinese who will be travelling overseas in the upcoming months: students.
