3 challenges to continued air traffic recovery

Flight data from IBA Insight shows that, by June 2022, global international flight volumes had recovered to 83% of ‘pre-pandemic' levels in June 2019. Global domestic recovery has recovered even further, and now sits at 87% of 2019 values. At 92% of 2019 levels, traffic between Europe and North America has recovered faster in comparison to the 70% recovery of traffic between Asia and Europe (which has continued to be hampered by travel restrictions)

“We are confident that the recovery in global air traffic will continue, but at a lower rate given the higher costs, lower capacity, and wider economic challenges the industry is grappling with.” – Geoff van Klaveren. Managing Director, Advisory.

What are the 3 main challenges?

The macroeconomic environment is driving 3 growing factors that present significant challenges to airlines and the aviation industry in recovering flight volumes.

1. Excess levels of stimulus, such as quantitative easing, industry support from governments, and wider forms of aid, coupled with fragile and time-sensitive supply chains, have led to a significant rise in inflation. In the Eurozone alone, inflation levels have jumped from 5.1% in January 2022 to 8.6% in June.

2. Costs and resources are a major issue, despite strong revenue. The rare combination of a strong US Dollar and high oil price are causing this. Around a third of airline costs are prices in $USD, and a lack of refinery capacity is widening the crack.

3. Staff shortages across the industry are limiting capacity. This is causing airports to cap flights, and airlines to cancel them. Low unemployment and prolonged security vetting are slowing recruitment. On the plus side, as demand is now exceeding supply, airlines have greater pricing power, with data from IATA showing that 64% of airlines have reported improved fare levels year-on-year.

Despite these significant challenges, our experts also recently highlighted that this unique combination of circumstances is yet to drive notable numbers of airline failures, mostly due to the level of demand. Overall, we forecast that passenger traffic will recover to pre-pandemic levels by the end of 2024, with an average annual growth rate of 3.2%.

IBA Insight is a one-stop aviation intelligence platform. Its visual analytics and intuitive navigation make it easy to export clear and relevant information which, supported by IBA's trusted asset optimisation and valuation methodologies, makes IBA Insight the global aviation industry's must-have tool.

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