19 May, 2023

Regional Dynamics in Global Air Traffic Recovery

The aviation industry and passenger air traffic are closely intertwined. Passenger air traffic refers to the number of people who travel by air, measured in revenue passenger kilometres (RPKs), while the aviation industry includes all the companies and organisations involved in air transportation, such as airlines, airports, aircraft manufacturers, regulators, and air traffic control.

The aviation industry has played a significant role in the growth of passenger air traffic. As air travel has become more affordable and accessible to people around the world, there has been a significant increase in those travelling by air (over 4.5 billion passengers in 2019).

Aviation has also been instrumental in promoting economic growth and creating jobs. It supports various industries, such as tourism, hospitality, and trade, by providing efficient and reliable transportation. The industry directly employs millions of people worldwide, including pilots, flight attendants, engineers, and ground staff.

However, the aviation industry is also one of the most impacted by external factors, such as geopolitical events, economic downturns, and health crises. The COVID-19 pandemic, for instance, led to a significant reduction in passenger air traffic, causing severe financial losses for airlines and airports. The industry is slowly recovering from the pandemic’s impact, but it may take several years to return to pre-COVID levels.

Despite these challenges, the industry continues to play a vital role in global transportation and commerce. It will continue to evolve and adapt to changing circumstances, with innovations such as new aircraft designs and alternative fuels helping to improve sustainability.

In 2022, global air travel was at 68.5% of pre-pandemic (2019) levels, according to the International Air Transport Association (IATA). Compared to 2021, international traffic increased by 152.7% in 2022 and surpassed 2019 levels by 62.2%. While domestic traffic in 2022 increased by only 10.9% over the previous year, overall domestic traffic performance in 2022 was at 79.6% of pre-pandemic levels. However, there are clear regional distinctions that can be made.

Asia Pacific

Before the pandemic, Asia was the global aviation growth leader and its biggest challenge seemed to be building up the capacity to support the boom in travel. Three years on, the recovery has not only been slow but has also been slower than all other regions globally. 2022 ended up being the year that Asia Pacific lost its title as the largest region for air travel.[1] Airports in Asia Pacific continue to operate at a loss, with total airport revenue in Q2 2022 approximately 59% lower compared to the same period in 2019.[2]

According to the Center of Aviation (CAPA) and OAG,[3] most of Asia’s large international travel markets are still hovering at around 50% of 2019 levels, with the domestic air travel market accounting for most of the recovery. Furthermore, this recovery has been very uneven. Although India has recuperated significantly and is only roughly 11% below 2019 levels, this has not been able to compensate for the poor recovery speed of Asia’s two largest travel markets, China and Japan. China’s zero-COVID policy meant that it largely kept international travel closed off, with traffic volumes at under 10% of previous levels. Japan has also maintained travel restrictions longer than other countries, capping its inbound tourist numbers to between 20,000 to 50,000 per day. Even after China eased travel restrictions in late 2022, Japan and South Korea imposed new COVID restrictions on Chinese travel. This soured diplomatic ties, resulting in China retaliating by halting short-term visas for both countries.[4]

However, despite the slow progress, there is reason to be optimistic about Asia’s recovery, which could reach 2019 levels by the end of 2023 or early 2024. Although there is still some tension within East Asia, China has moved away from its zero-COVID policy and recently allowed travel agencies to resume outbound group tours to 20 overseas destinations.[5]

Across the region, we expect to see a strong return in business travel with the resurgence of in-person Meetings, Incentives, Conferences, and Events (MICE). We also expect tourism to rebound quickly as travellers rush to scratch their travel bug itch.

Europe

In 2020, air traffic in Europe decreased by around 70% compared to the previous year due to travel restrictions and lockdowns imposed by many countries to control the spread of COVID-19. However, 2022 was the year where European aviation bounced back, despite the pandemic and the war in Ukraine.

The recovery was slow in Q1 2022, with traffic at around 70% of pre-pandemic levels due to the restrictions imposed as a result of the Omicron wave and airspace closure resulting from Ukraine’s invasion by Russia. However, from March 2022 onwards levels increased to 80% by May 2022 and then rose further to 86%, a performance level that was maintained until the year’s end. Overall, in 2022, 9.3 million flights were in operation, 3.1 million more than in 2021.

According to an analysis conducted by EUROCONTROL, the global number reflects wide traffic variation across airlines, airports, air navigation service providers (ANSPs), and states. Interestingly, low-cost carriers were leading the air traffic recovery in 2022 by 85% of 2019 traffic. However, Europe’s top airports mostly struggled to recover more than 83% of 2019 traffic.

The recovery of air traffic in Europe post-COVID-19 is likely to be gradual and subject to various external factors. The pace of vaccination efforts, the implementation of travel restrictions and quarantine measures, and the overall economic situation will all play a role. Moreover, the pandemic has highlighted the need for more sustainable and resilient aviation systems, which could lead to changes in the industry’s structure and practices.

In addition, the ongoing war in Ukraine has had a significant impact on air traffic, particularly in Eastern Europe. Several countries in the region have implemented restrictions on flights to and from Ukraine due to the conflict, while some airlines have suspended their operations in the country. The conflict has also led to the closure of airspace in some parts of Ukraine, leading to diversions and delays for flights travelling in the region. Furthermore, the political instability and uncertainty have led to a decline in travel demand and tourism, which has further affected the aviation industry in both Ukraine and neighbouring countries. The situation has also led to concerns about the safety and security of air travel in the region, leading to increased scrutiny and caution among airlines and travellers. However, it is essential to note that the situation is continually evolving, and the impact on air traffic could change depending on developments in the region.

EUROCONTROL forecasts 2023 total traffic to reach 92% of pre-COVID levels, with a full recovery from the pandemic set to take place in 2025.[6]

Conclusion

Key potential threats to a stable recovery include new COVID strains, diplomatic tensions, and challenges to capacity rebuilding.

IATA reported a significant increase in travel demand for March 2023. According to IATA, international traffic increased 68.9% compared to March 2022, with significant growth seen across the board (once again, driven by carriers in the Asia-Pacific region). International RPKs reached 81.6% of March 2019 levels, while the load factor of 81.3% was 10.1 percentage points higher than in March 2019. This was driven by a threefold increase in demand for Asia-Pacific carriers as China’s reopening gained traction.

Furthermore, as stated by Willie Walsh, Director General of IATA, there is good evidence that domestic and international ticket sales continue to expand strongly through the busiest summer travel season in the Northern Hemisphere.[7]