The UK roll-out of Covid-19 vaccination and introduction of a ‘test and release’ scheme to cut quarantine restrictions should “put a floor under the decline” in air travel, according to a leading aviation analyst.
Jonathan Wober, CAPA – Centre for Aviation chief financial analyst, hailed the twin developments in the UK, but warned: “Any meaningful impact of vaccines on demand for air travel may be some months in the future.”
Speaking on a CAPA Live webinar, Wober noted demand is failing to keep pace even with vastly reduced airline capacity, with fewer than 30% of seats normally available in Europe on sale in December.
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He reported capacity “as a whole is at only 27% of 2019” levels, but with passenger numbers “consistently 10 percentage points below” seat capacity.
UK seat capacity was just 13% of 2019 capacity in late November.
However, Wober said: “The UK, normally Europe’s biggest aviation market, has become the first country in the world to approve a Covid-19 vaccine [and] the UK allowing arriving passengers to shorten the 14-day quarantine period should help to put a floor under the decline.”
That was after a recovery to 45% of 2019 level in mid-August. However, Wober noted the decline had stabilised at -73% for the past three weeks.
He warned: “The months ahead will be very challenging and not all airlines in Europe will make it.
“The recovery in 2021 will depend on the timing and take up of mass vaccination and on the continued application and development of biosecurity measures and Covid testing, as well as on the economy.
“It will be led by domestic and other short-haul markets and by VFR and leisure before business travel.
“These factors favour low-cost carriers, which mostly have better balance sheets.”
However, he noted Norwegian Air “is adrift at the bottom and sought creditor protection in November”.
Fellow CAPA analyst Richard Maslen reported the Middle East remains the worst-performing region in the world with air traffic down 88% year on year in November and load factors below 40%.
Maslen noted the region’s carriers already faced problems going into the pandemic, with Qatar Airways suffering travel restrictions due to the blockade by many of its neighbours, Etihad Airways in retreat from its “ill-conceived” airline investment strategy and Emirates “coming to terms with a fleet strategy that left it especially exposed to reductions in demand”.
He said: “Surveys suggest travellers would rather avoid major hubs in favour of non-stop flights.
“However, with reduced demand we are likely to see a removal or significant reduction in direct markets and hubs will play a crucial role.”
Maslen added: “The reduction in business travel will be a big problem for many airlines. It contributes as much as half of some airlines’ passenger revenue.”