As the second quarter financial results for airlines begin to be finalised, for many carriers’ revenues are higher than ever reported before, suggesting that it has been a bumper season for airlines around the world.

Those results then go on to report some of the highest operating costs as well! Now if only there wasn’t a series of economic issues, volatile currency markets, political issues, the threat of another round of Covid as winter approaches and of course China remaining closed! At every operating height and level there are strong headwinds to be faced this winter, but at least the industry has proven the strength of the market in even the hardest of times.

Continued confidence in the market is reflected in airline capacity broadly remaining unchanged week-on-week through to the year-end with some modest increases in capacity reported (although they reflect late schedule notifications from China rather than any significant moves in sentiment).

The consensus, and one that we have been saying for a long time, is that capacity this year will end up at around 87% of 2019 levels - subject to no major events before the year-end. If 4.8 billion scheduled seats is achieved in 2022 that will be 31% more than in 2021. The industry would only need to record 20% growth from this point to be back to 2019 levels, perhaps big ask given the current environment but something to strive for.

This week’s capacity is back where it was two weeks ago as last week’s capacity increases in China are all but wiped out by another round of capacity cuts across the country. Global capacity has just about managed to stay above 94 million for the week, a 3.3% cut on the previous seven days with much of the damage in North East Asia. Although Central/Eastern Europe has seen the loss of 290,000 (-8%) seats which hasn’t helped the overall picture. The reductions in Eastern Europe are all Russia related with a 16% reduction in production.

Easing some of the pain has been a recovery in the Lower South America region with capacity now back to more regular levels following a 6% recovery week-on-week. Such regular fluctuations across regional markets are increasingly a thing of the past, only North East Asia and Lower South America continue to face the challenges of movements in both directions, for most parts of the world stability is a feature of the weekly data.

Thailand Triples Capacity in 2022

As the summer season ended we saw Greece slide out of the Top 20 Country Markets table and now Thailand is just holding onto the twentieth spot having tripled capacity in the last year and will continue its recovery through the rest of the IATA Winter Season, especially if China makes some concessions on international travel.

Japan: Changes in International Capacity

One of the learnings from the pandemic experience is that when a market announces the easing of travel restrictions it does not always necessarily result in an immediate increase in capacity for several reasons, including:

• Surrounding major markets staying closed
• Operating resources being stretched
• Both the airline and the market remaining cautious

Japan is perhaps a case in point. Last week international travellers were freely allowed to enter the country where, interestingly, the value of the Japanese yen has never been lower against the dollar.

The table below highlights how capacity has been added back from Japan to major international markets over the last few months following the announcement of the re-opening for unrestricted travel. Not surprisingly, the more local market routes to South Korea, Chinese Taipei and Hong Kong are the major benefactors, but other points such as the USA, Australia and the United Kingdom are seeing some recovery by December. However, one note of caution, as there always is, flight times to some markets have increased. This weekend an Air France service from Tokyo – Haneda took 13 hours and 31 minutes operating via an easterly polar routing over North America; that’s about an hour longer than in 2019 - but the routing is perhaps the interesting factor. 

Stability Returns to Airline’s Schedules

Next, we have explored how much more stable airlines’ capacity has become in recent weeks. Taking the planned schedules for this week that were loaded on the 5th September and comparing them with the current data we can see how volatile their schedules have been, or indeed haven’t!

As you can see aside from the Chinese domiciled airlines, most carriers in the list made less than a 2% change in their capacity over the seven-week comparative period, in the height of the pandemic we were seeing capacity changes of over 10% regularly over such a time series so things certainly are settling back down.

So, with less than two weeks of the IATA summer season remaining airlines are already planning their season-ending maintenance activity and dropping back capacity for what is normally a quiet period between the end of October and mid-December unless, of course, you are in the United States and turkey chasing at the end of November!

Looking forward at airline capacity just a few weeks reveals some quite staggering reductions in capacity compared to this week, Ryanair will operate 25% fewer seats, easyjet 27% less and Jet2.com a staggering 45% fewer seats; those are not panic changes but reflective of yearly changes in capacity. All of this brings the curtain down on the Summer 2022 operating programme, a record revenue-generating period for many airlines and for many others and airports a daily battle with available resources. Will Summer 2023 be any better? Probably, but we’ve got a winter to get through first!

Stay safe everyone.

Editors note: the headline for this blog was updated on 19 Oct 2022 and was changed from '2022 Airline Capacity Predicted to Reach 87% of 2019 Level' to '2022 Scheduled Airline Capacity Predicted to Reach 87% of 2019 Level'