Hold tight

With Covid-19 restrictions, industry fortunes plummeted faster than any thought possible. The sharp upswing since has seen an unemployment crisis for pilots turn to a flight crew shortage, and airports that recently resembled ghost towns become teeming hubs unable to cope.

Now with the world facing soaring inflation, high oil prices and massive economic uncertainty, what are the prospects for next year and 2024? Is the current surge in passenger numbers mostly a result of a pent-up desire to travel after two summers of cancelled trips? Will consumers and businesses cut back on discretionary travel as the bills pile up and rising prices start to hurt?

For the moment at least, demand continues to outstrip supply across much of the sector, with several airlines reporting record performances. European low-cost carrier Ryanair this week said it carried 16.8 million people during July, two million more than the same month in 2019. It has been beating its pre-Covid passenger numbers since March.

Air Canada also said this week that it had experienced “one of the steepest ramp-ups” of any airline, with its revenues growing five-fold during the second quarter of 2022, compared with the same period in 2021. The flag-carrier admits that, while welcome, the boost has brought operational challenges, including flight delays and lost luggage.

Those pinch points from an industry forced to downsize suddenly in 2020 and now having to resource back rapidly even clearer in Europe, where Amsterdam’s Schiphol airport said it was extending passenger capacity restrictions to October. Images of frustrated travelers in queues stretching outside the terminal have dented the reputation of one of Europe’s biggest hubs.

Its competitor London Heathrow is faring little better, with its biggest airline British Airways taking the decision this week to limit sales of tickets for short-haul flights. Two years ago, executives from the airport were warning that Covid travel bans could put it out of business. Now Heathrow is shutting its doors, restricting numbers of departing passengers to 100,000 a day until September.

The business aviation sector had a good pandemic – with many well-off users turning to it for the first time as a perceived safer or often the only way to get from A to B. This week the boss of corporate jet manufacturer Bombardier said airport disruption was continuing to encourage wealthier business travelers away from airlines and towards private aviation.

China’s response to the visit by US House Speaker Nancy Pelosi to Taiwan included a series of live-fire drills off the coast of what it regards as its renegade province, prompting airlines to reroute or cancel flights. The exercises have effectively cut the island off from the world – how frequently Beijing plans to repeat this is information the communist authorities will be in no hurry to disclose.

Finally, there has been a potentially promising breakthrough this week for sustainable aviation fuel, which many see as being the best short-term bet for aviation to reduce its carbon output. Lufthansa Group said it had reached a seven-year agreement with energy firm Shell to provide it with SAF between now and the end of the decade.

Many hurdles stand in the way before SAF reaches a critical mass of availability that will allow prices to fall, including investments in refinery and airport infrastructure and support from governments. Another is commitments to purchase from major airlines, and Lufthansa’s move could go some way to creating regular supplies of this less-environmentally-damaging fuel at airports around the world.