Summer supply will be almost equal to 2019, but the crisis and more expensive fuel that could prolong the path of losses see an uncertain autumn
A happy summer, an uncertain fall and a year when the recovery desired by airlines after the pandemic may be a step away. The first thing that is already almost equal is the offer – globally a capacity of 92% of the seats in its aircraft is expected for August compared to 2019 and in Spain it will reach 94% -; the next thing that is expected to be achieved is traffic, but there is still a long way to go.
According to the International Air Transport Association (IATA), air travel demand increased by 78.7% in April compared to the previous year. However, it was still 37.2% below the pre-covid level (measured in passengers per kilometer transported), that is, the volume of air traffic barely reached two thirds (62.8%) compared to what it was in April. reached 2019.
“The risk of increasing capacity is that the market does not follow the available supply and the load factor drops below the profitability margins per trip,” warns Romà Andreu, aviation expert and professor at EAE Business School. That could happen in the medium term, closer to the winter campaign, but not this summer, except as a surprise. “The entire industry hopes it will be confirmation of the return to the path of recovery,” he said.
In fact, what happened a few weeks ago is the exact opposite. A “sudden” influx of travelers at European airports is a “challenge” for airlines and airports themselves, according to ACI Europe, the association that groups the latter. The pandemic, he notes, “has greatly reduced airport resources and corporate ground handling.” Now they are trying to restore that human potential, but due to training and security accreditation issues, it would take between three and four months to achieve this.
London, Berlin, Frankfurt and Amsterdam are the airports with the most cancellation problems – Lufthansa, Air France-KLM and British Airways (IAG) have canceled hundreds of flights – due to staff shortages. In Spain, the long queues since Easter are no longer something isolated and have forced the cancellation of more than 1% of the planned routes. The Association of Air Lines (ALA) – which expects a “very good summer” – asks the government for more agents and technical resources for customs, because with ‘Brexit’ the influx to non-Community steps has (slower) multiplied by the sum of the British.
Despite these issues -Iberia has denounced that more than 15,000 of its customers have lost connecting flights since March due to delays-, Aena has just raised its passenger traffic estimate for this year from its previous 68% to a range of 75%-85% compared to the figures for 2019, a “record year for the tourism sector”, Javier Gándara, president of ALA, points out that the comparisons made have real value. In the first five months of the year, according to the airport manager, 80.1% of that previous level had been reached – in the Canary Islands and the Balearic Islands this is expected to be exceeded this summer, while flights managed from Spain (Enaire data ) already They accounted for 95.1% in May compared to the pre-covid result.
“In 2023, we hope to restore the 2019 numbers,” Gándara said, although they are not clear at what time of year because the autumn-winter period – he admits – “still leaves a lot of uncertainties.” Vicente Segura, Deloitte’s operations consulting partner, lists a few: “fundamental inflation, the energy crisis, the war in Ukraine and the economic environment”, factors that “could change the trend” of a sector whose profitability is “still very is harmed”. And it’s that their income at the end of the first quarter was still – on average – 31% lower than that of the pre-covid course.
In 2020, the airlines lost 130,000 million euros, in 2021 it was 48,500 million and this year they hope to keep their red numbers below 15,000 million to restore profitability by the end of 2023 or well into 2024. low-cost operators, according to David Hoh, aviation partner of KPMG Spain, because the flagship airlines (“legacy”) “reliant more on long-haul flights” and business travel, “which leave more money and cost more to recover,” said Pere Suau, professor economics at the UOC.
Another headache, more medium-term than short-term because of the fuel consumption coverage contracts (between 60% and 70%), is the rise in the price of kerosene, which costs twice as much as a year ago. If it doesn’t budge, IATA estimates it could increase the sector’s losses by 20%. Coupled with skyrocketing inflation, airlines are planning to raise their fares, which until April were on average 14% lower than in 2019.
The economic crisis, exacerbated by the war in Ukraine, has not delayed but complicates the decarbonisation targets set by the European Union for air transport – net zero emissions by 2050 and a 55% reduction by 2030. “The fight against climate change remains a priority,” said Javier Gándara, president of the Airline Association (ALA).
To this end, she advocates the promotion of sustainable aviation fuels (SAF), either via biofuels – based on raw materials such as used oils or non-food crops – which can reduce CO2 emissions during their life cycle by up to 80%, or via fuels synthetically – still in the experimental phase and that mix hydrogen with atmospheric carbon – which could reduce them by up to 100%. The problem is that today the production of SAF is very small and its cost is still quite high (on average three to four times more than normal kerosene), so the sector is asking for help from the EU and national governments .
Air transport is responsible for 3% of global greenhouse gas emissions. In the EU it will be required that at least 63% of fuel consumption will be through SAF by 2050 (by 2025 this would be 2%), but that would imply a world production of 450,000 million liters, compared to just 200 million today. Intermodality with the high-speed train to reduce travel – although flights of less than 500 kilometers in Europe account for only 4.3% of emissions – and to implement the Single European Sky once and for all to optimize flight management – the reducing emissions by 10% – the goal would help.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
