Aviation faces turbulence as airlines cut back on capacity

Further recovery in the global aviation sector is unlikely by the end of the year as airlines have cut back on their planned capacity in August 2021.

According to the UK-based global travel data provider OAG, airlines’ hope of $160 billion revenue injection lost in August following travel restrictions due to Delta variant of the Covid-19.

“Since the first week of August, airlines around the world have cut back their planned capacity by some 100 million seats. Assume in normal times 80 per cent of those would have been filled at an average yield of $200, that’s $20 billion of revenues airlines had ‘hoped’ to see that isn’t going to happen,” said John Grant of OAG.

“The situation is grim with many international markets heading in the wrong direction for at least the next few months. For airlines that have recalled staff, furloughed them again, redesigned their networks, and added aircraft back to their operations, the costs are a heavy burden to take forward into the winter,” he said.

OAG said as the summer season draws to a close, it seems that any hope for recovery is now further away than ever and although there may be some pockets of recovery between now and the end of the year, much of the market is stuck.

On the other hand, the International Air Transport Association (Iata) released July 2021 data for global air cargo markets on Wednesday, showing that demand continued its strong growth trend. Global demand, measured in cargo tonne-kilometres, was up 8.6 per cent compared to July 2019. Overall growth remained strong compared to the long-term average growth trend of around 4.7 per cent. The pace of growth slowed slightly compared to June which saw demand increase 9.2 per cent against pre-Covid-19 levels. While capacity continued to recover but is still 10.3 per cent down compared to July 2019.

The Middle Eastern carriers posted an 11.3 per cent rise in international cargo volumes in July 2021 versus July 2019.

“July was another solid month for global air cargo demand. Economic conditions indicate that the strong growth trend will continue into the peak year-end demand period. The Delta variant of Covid-19 could bring some risks. If supply chains and production lines are disrupted, there is potential for a knock-on effect for air cargo shipments,” said Wille Walsh, director-general at Iata.

— waheedabbas@khaleejtimes.com