2024: A Record Breaking Summer for the Transatlantic Market

While the weather in the United Kingdom may be below average so far this summer, the market between North America and Western Europe has never been hotter! 2024 will be a record breaker with nearly 140,000 scheduled flights which represents:

  • +6% on last year’s record breaker
  • +8.5% compared to 2019 levels - the year before the pandemic impacted every market in the world.

The Atlantic is a market that has continued to go from strength to strength over the years as airlines have added new destinations and LCCs (low-cost carriers) came and went, so what’s driving the growth and can we expect more next year? 

It’s the Economy (Well, Half of It!)

Travel demand has always been linked to economic activity and growth. Until the last decade there was a classic “multiplier” of demand to GDP between countries. In recent years, the linkage in that “multiplier” has been tested by many external factors, however, one thing is clear - exchange rates can see a market switch almost immediately.

Europe seems flooded with US visitors for the second year in succession, and the driver is, undoubtedly, exchange rates; the strength of the US Dollar against both the Euro and Pound Sterling.

  • In December 2020, 1US$ bought 0.82 Euros - today it’s worth around 0.92 Euros, a 12% appreciation in purchasing power.
  • In 2021, 1US$ bought you £0.70 pound sterling , compared to £0.78 today; ten percent more, or put another way, one hotel room free every ten nights!

Airlines have recognised that swings in exchange rates can rapidly move the area of sale demand. The Atlantic is now full of US tourists capitalising on the strength of the dollar with markets such as Italy, Spain and France benefitting.

Changing Airline Fleets and Available Capacity

Whilst airlines meticulously plan their networks and fleet orders years in advance, they equally need to be flexible enough to respond to changing geopolitical circumstances. For many airlines their long-haul fleets are in a period of evolution with an increasing use of new generation aircraft operating across the Atlantic (as the chart below shows).

This summer 62% of all scheduled airline services will be operated by the three most popular aircraft types:

  • A330
  • B777
  • B787

Ten years ago those three aircraft types operated just 20% of all flights, with the B767 the second most popular aircraft operating in 2014. Classic aircraft types such as the B747 now account for just 1% of all transatlantic services with Lufthansa the sole operator, while the A380 is only operated by British Airways, Lufthansa and Emirates who operate some interesting 5th Freedoms from Southern Europe to the USA. Lufthansa, interestingly, are the “classic” transatlantic operator using A340s, A380s and B747s on their range of services as well as more modern A350s and B787s. 

The increasing choice to use next generation wide-bodied capacity provides airlines with lower operating costs and, in many cases, slightly less capacity per flight than has historically been operated. A combination of savings in operating costs and the potential for slightly higher yields continues to make flying across the pond increasingly attractive to airlines and in response new destinations are being added every year.

More Routes, More Choice & Competition

This summer there will be approximately 445 different airport pairs operated across the Atlantic ranging from the largest such as:

  • JFK – LHR,
  • CDG – JFK,
  • LAX – LHR

Through to some real one-off services such as:

  • CPH – MIA,
  • MIA – MUC

This highlights one of the notable features of the transatlantic market: the scale of route churn that takes place from season to season.

Compared to last Summer the 445 airport pairs operated represents an increase of sixteen new routes but remains below the peak Summer 2017 season when 488 airport pairs were operated. New routes this summer include services from Boston to Funchal and Oporto from SATA International, and Frankfurt – Raleigh Durham from American Airlines. Meanwhile, dropped for the summer are a Heathrow – San Jose service from British Airways and a London Gatwick – Calgary service from Westjet. Network churn is a part of any airlines' operation and that is particularly the case when you overlay the impact of LCCs in the market. 

More Low-Cost Long-Haul Than Ever

This Summer represents a record year for LCCs operating across the Atlantic, with a 5.3% frequency share with just over 7,300 flights scheduled. Although in capacity terms their share of the market is just 4.6% by virtue of those airlines operating a lower than market average capacity per flight.

With such a small share of the market the ability for these airlines to disrupt the market is extremely limited, especially when access to major hub airports is factored into the mix. Network experimentation is a major part of LCCs' operations. This year there are 47 airport pairs operated by the low-cost sector compared to 36 last year, with new routes such as Athens to New York JFK from Norse Atlantic Airways.

The long-term success of long-haul LCC services is always a question and their fragile market share makes them vulnerable to competitive pressures when market demand softens and the price of oil hardens. Aside from markets such as New York and perhaps Florida, year-round operations can be hard - resulting in increased operating costs from launching, closing and then relaunching services each year.

Jet Blue Airways - still classified as a LCC although perhaps now more of a hybrid carrier - have already started making network adjustments to their winter 2024/25 programme, while just launching seasonal services to Edinburgh. This highlights just how much a carrier can change their network and indeed strategy in a few weeks of analysis.

Transatlantic Markets, Difficult to Change

While it may the busiest ever summer season on the Atlantic - and airlines will certainly be enjoying a combination of strong demand across both established and new routes being trialled - on a seasonal basis, the reality is that this is a very hard market to both break into and in which change occurs. The legacy airlines and particularly the three major alliances dominate capacity through their joint venture agreements, some 80% of all flights will be operated by alliance carriers, 5% by LCC’s and then a smattering of non-aligned legacy carriers such as Icelandair, Condor and Air Transat who all adjust capacity from season to season as they compete in one of the toughest markets in the world.

But despite that lack of real change in the market structure there is no doubt that the Transatlantic market remains one of the most attractive markets for airlines and for many carriers is the most profitable part of their networks. That competition and insatiable market demand brings something new to the market every summer  and that has to be good for consumer choice and spreading tourism across a wider range of destinations - something that helps every destination in the long-term.

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