It goes without saying that Covid-19 has had a significant impact on the passenger demand for air travel. Since March, travel restrictions have been implemented for most of Europe due to government lockdowns and fears of spreading the virus. The following graphs outline the impact of Covid-19 on airline departures to Mainland Europe. Many airlines grounded their fleets as borders closed and lockdowns hampered the movement of passengers. As restrictions begin to ease a severely wounded aviation market is now beginning to recover.
Using data from InsightIQ, Figure 1 above shows the impact of Covid-19 on the most popular UK departures to Europe in July 2020, compared to July 2019. Of the 10 most popular routes below, The Netherlands has seen the largest reduction of flights serving the UK, with only 17% of flights departing the UK in comparison to last year. Multiple carriers serve the Netherlands, but many of these routes were cancelled at the height of lockdown. However, KLM continued to operate flights to key UK cities to keep essential connectivity open and to repatriate citizens.In a bid to aid recovery, the UK Government announced the creation of "air bridges" enabling passengers to travel to countries without quarantine, in a bid to boost tourism and aid in the recovery of the aviation industry. Spain (along with Germany, France & Italy) was one of the first to open their borders to the UK.Spain is a common hotspot for Brits, with 13,003 flights performed in July 2019. However, Covid-19 has caused this number to fall drastically to 3,205 flights as of July 2020. The impact looks worse than it actually is, as many Spanish cities are served with multiple daily UK departures from regional UK airports.
When compared to The Netherlands, airlines are focussing on Spain to recover their summer schedules, as these routes will benefit from a higher load factor to help recover lost revenue. As passenger demand is much lower than last year, matching last year's flight schedule is unsustainable, resulting in countries being served by much lower frequencies of flights. For example, Spain may not be served by multiple daily departures from UK airports, instead only once per day.
Figure 2 above illustrates the routes which have seen the least impact in comparison to 2019, though it should be noted that most of these represent lower demand routes. Departures to Moldova have seen the least impact with 87 flights departing for Moldova in July 2019 compared to 67 in July 2020. Moldova, along with North Macedonia, is not very well served by the UK.Any direct departures from the UK are not served by daily flights, due to the limited demand for these routes. It is much more sustainable to fly these routes on a lower frequency. As a result, some of the routes are operated as an outright monopoly by airlines. An example of this is North Macedonia, which has two main airports; Skopje and Ohrid. The largest carrier for both of these cities is Wizz Air, due to North Macedonia not having their own national airline. London is the only UK city that flies to North Macedonia, to which Wizz Air has the monopoly on the route.
Covid-19 has heavily disrupted travel to many destinations with Figure 3 below showing the routes that have suffered the worst impact. Greece has been significantly impacted, in July 2019 4,008 flights were performed whereas in July 2020 only 19% of the previous year's total flights have departed. Many of the countries in this chart have only recently opened their borders which has resulted in a delay to routes resuming. Austria for example, has only just resumed their routes, with Austrian Airlines grounding all of their flights during the height of the pandemic. Some routes are expected to be on this list, including Switzerland, Finland and Sweden as during the summer months, tourism to these countries are lower than the winter ski season. The winter will see more flights to these regions, meaning airlines will not utilise their aircraft on these routes and will focus on the more profitable summer routes. Slovenia on the other hand saw their flag carrier airline Adria Airways go bankrupt which has hampered connectivity between Slovenia and the UK.
The UK Government recently announced that France is now subject to quarantine restrictions. France is extremely well connected to the UK, with Ferries from most ports on the south coast, Eurostar and Eurotunnel connections, and flights from many UK cities. France was one of the original countries on the UK governments "air bridges" scheme and this recent news has come as a big blow. Figure 4 below shows the top operators who served France in 2019, with EasyJet taking the lion's share of airline departures to France. EasyJet serves many French cities from regional airports in the UK, whereas Air France focuses on linking Paris to major UK cities. They act as feeders to serve their long-haul capacity, as well as provide essential business connectivity.
The impact of the restrictions will be more significant for the regions of France outside of Paris, which may have greater dependence on tourism which is seen in Figure 5 below. Regional French cities benefit from direct UK flights with low cost carriers. These flights are essential to these regions, and if demand does not return to these flights, airlines could be forced to close the route if they remain unprofitable. Paris on the other hand will remain connected to UK cities regardless, not only via air travel but also through the use of alternative transport options including the Eurostar.
Ultimately, the uncertainty that Covid-19 brings has inevitably caused a blow to consumer confidence. A fear of a second wave across the continent is causing concern to potential passengers. Air Bridges have helped to boost tourism for the summer season, but the recent changes in quarantine policy cause disruption to the last of the summer travel plans. Most of all, many passengers are put off by the financial implications of the new restrictions. Passengers who had booked to travel are suddenly needing to pay for alternative travel arrangements, and may be subject to a loss of earnings when back in the UK.
If you have any further questions or comments please get in touch: Jamie Davey, Engine Analyst
The data used within this analysis was derived from InsightIQ our leading online data intelligence platform. The intuitive system gives you an instant connection to your portfolio values, historical data, utilisation of aircraft, fleet data and visibility into trends, risk and the impact of macro-economic variables.
Discover what makes InsightIQ the leading aviation intelligence platform
Using IBA's Operator Score for a sample of operators, we spotlight COVID-19's influence on the aviation industry and analyse government support for airlines as a proportion of their net profit, comprehensive margin and cash position. Below, IBA shares its opinion on government intervention to help airlines overcome the risks associated with COVID-19's downturn.