Air traffic is recovering. Recent data provided by Eurocontrol indicate that it is already above 50% of the 2019 level, with the exceeding 18,200 daily flights.
In the last two weeks they have experienced growth in almost all European traffic networks and, in particular, France (+ 20%), Italy (+ 17%) and Greece (+ 32%) increased. However, the UK was down 3%. In the specific case of Spain, we added 2,776 flights last Monday, which is equivalent to an increase of 15% in the last two weeks.
Is strong recovery in travel demand that took the first steps in May of this year, highlighting the benefits of vaccine combination and a large geographic footprint for the return of domestic travel demand.
The global airline industry has been disproportionately affected by the coronavirus pandemic. The industry is one of the few that saw demand drop by more than 90% in the weeks after the crisis started.
While air travel itself is a key catalyst for tourism spending, the outsourcing by airlines of many services, along with their significant jobs and consumption of refined oil in normal economic times, similarly support economic activity in many sectors.
We can see it in the following graph that shows the evolution of the price differential of aviation fuel with respect to diesel. The drop in flights driven by country lockdowns saw production of normally valuable jet fuel diverted to other petroleum products, such as diesel and naphtha. Hence the fall in the differential in March 2020.
Passenger demand for air travel drives demand from key stakeholders in the aviation industry, including airport operators, aircraft leasing companies and aircraft manufacturers, as well as a multitude of service providers that keep airlines and airports running.
Airplanes on the ground mark the state of aviation
An aircraft only generates revenue when it flies, and only generates costs when it is on the ground. So airlines work to maximize air time. In 2019, before the COVID pandemic, over the course of a typical week, around 2,000 planes would remain parked at our airports.
Airplanes are busiest in summer, so there is a natural seasonality: the number of inactive people fell by around 1,500 in July 2019. Inactive aircraft could be business and private aviation aircraft that do not necessarily fly every week, aircraft undergoing maintenance or repair, or even recently retired aircraft.
Already at the end of 2019, traffic growth was weakening and there was a slight increase in the number of idle aircraft compared to the previous winter. In April 2020, when Europe went into closure, we saw the most dramatic change: 5,000 planes that flew regularly each week joined those parked at our airports.
At the peak of time, almost 7,200 aircraft were “asleep”, occupying the platforms, taxiways and even runways when necessary. For days, weeks and months, depending on the case and the airline’s strategy. Some airlines even accelerated plans to retire part of their fleet, including icons such as the B747s or the A380s. (Those who fly to deserts outside of Europe are left out of these statistics.)
The partial recovery of traffic in the summer of 2020 allowed some of these idle aircraft to fly again and the total number of idle aircraft dropped to just over 3,500. But then the second winter wave of COVID in Europe brought many of these aircraft to the ground, and although the Christmas season improved the situation, new travel restrictions with the third wave of COVID in early 2021 made the number of planes idle. it was back to almost 5,000.
As the summer of 2021 progresses, the smooth recovery of flights is bringing more aircraft back into service: more than 800 since the beginning of May, leaving our airports with the fewest idle aircraft since the pandemic began.
According to an IATA release dated June 4, 2021, using data from Airline Analyst, European airlines suffered the most negative cash flows in the first quarter of 2021 and the public sector has been supporting the industry so that it does not fall.
European airlines generated an output of Net cash from operating activities at 34% of revenue in the first quarter, compared to 5% globally. Europe’s free cash flow was even worse, at -44% of revenue, compared to -18% globally.
This performance reflected the spread of the virus and strict travel restrictions in Europe. The truth is capacity and traffic trends have improved in the second quarter of the year, but not much. Cash flows are likely to remain significantly negative during this period.
Looking ahead to the third quarter, it will be crucial for European airlines, as it is usually the strongest quarter, IATA rightly observes that financial returns will vary by region.
He adds that airlines with high exposure to domestic traffic will perform better, favoring North American operators. For North American airlines, 75% of the seats were domestic in 2019. On the contrary, only 24% of European airline seats were in national markets.
The still inconsistent and strict restrictions on international travel in Europe put the region’s airlines at risk of remaining those of worst cash performance this summer.
Source: El Blog Salmón by feeds.weblogssl.com.
*The article has been translated based on the content of El Blog Salmón by feeds.weblogssl.com. If there is any problem regarding the content, copyright, please leave a report below the article. We will try to process as quickly as possible to protect the rights of the author. Thank you very much!
*We just want readers to access information more quickly and easily with other multilingual content, instead of information only available in a certain language.
*We always respect the copyright of the content of the author and always include the original link of the source article.If the author disagrees, just leave the report below the article, the article will be edited or deleted at the request of the author. Thanks very much! Best regards!