Resource Constraints Cloud Aviation's Bright Summer Outlook

This summer will see air traffic return to pre-Covid-19 levels in North and Latin America, parts of Europe and the Middle East. But the situation in China is casting a long shadow over the Asia-Pacific, where prolonged travel restrictions have delayed a full recovery. A webinar this week by aviation data analysis firm OAG underlined the factors that are driving up — and in some cases restricting — airline capacity across the globe this summer. Energy Intelligence estimates show jet fuel demand climbing by 12% or some 717,000 barrels per day to 6.9 million b/d this year. But that gain is lagging behind capacity growth due to more efficient aircraft and slow recovery of interregional flights, especially in Asia.

For the first time in three years, this summer will feature the typical uplift in seasonal air traffic that pandemic-related travel restrictions tempered over the last three years. OAG data show that global seat capacity will be just 0.3% lower than during the summer of 2019. Domestic travel markets continue to dominate the global picture. Seat capacity in domestic markets this summer will be 6.5% higher than in 2019, while international capacity is still off by 8.2% due to the slow rebound in China and Asia.

Resource Challenge

Airlines will continue to struggle with resource issues that caused widespread disruptions to airline and airport operations last year. The peak travel season will provide “a stress test for resources: Can airlines deliver these schedules and capacity growth?” said OAG chief analyst John Grant. During the pandemic, airlines became adept at calibrating their flight operations to the initial plunge in air traffic and daily changes in travel demand. They reconfigured their operations to focus on major routes, pushing up the average seat capacity per flight. At the same time flight frequencies also fell, largely due to much less flying by regional carriers in the US, Grant pointed out.

Resource constraints — especially an acute shortage of pilots — are putting a brake on how much further airline capacity can grow this year. That problem is not likely to be resolved anytime soon, due to long time lags in training new pilots. In the US, a battle to recruit more pilots is raging, with regional carriers losing theirs to the majors and American Airlines this week matching Delta’s agreement with the pilots' union for a 30% pay increase over four years. The tight labor market has impacted the whole aviation ecosystem, putting pressure on the entire travel and hospitality sectors. “You don’t need a pilot if you can’t get past security” due to airport staff shortages, said Deirdre Fulton of Midas Aviation.

Scheduling Changes

Grant emphasized the issue has become so acute that airlines have taken out capacity in April and May to save resources for the summer season. “We are seeing fluctuations in flight schedules nearly every week as airlines struggle to match supply with demand,” he said. Grant also suggested the big question hanging over the industry is if — and when — corporate travelers will return to the skies at pre-Covid-19 levels, now that remote working and video conferencing have taken root across the globe.

Since its reopening in early January, China has been shifting capacity from domestic to international services. But international capacity in the Northeast Asian triangle that links South Korea, Japan and China is still lagging behind. Japan is now accepting flights from China at just four of its airports, as opposed to 12 locations prior to the pandemic, OAG data show.