Press Review by Valeriia KOSKI & Eliott VEILLE, Oct. 18 to Oct.24, 2022

Recovery will take more time than expected

The return of air traffic will be most likely delayed until 2025. At worst it will not return to normal before 2028.

By Valeriia Koski and Eliott Veille

On October 17 Eurocontrol, The European Organisation for the Safety of Air Navigation, announced an updated air traffic forecast for the period up to year 2028. According to the forecast since the beginning Europe is at 82% of the 2019 traffic figures. As for the beginning of October 2022, European network traffic is at 87% of the 2019 figures. The positive aspect is a strong summer figures in most of the European States, that demonstrate trend of recovering from the COVID-19 pandemic.

However, the latest revision of the Oxford Economics’ basic GDP forecast draws attention to several risks increasing the uncertainty of air traffic recovery. The reasons are inflation and declining growth and disruptions brought about by the geopolitical situation. Referring to Eurocontrol data air ticket prices started to increase in May 2022. On average since the beginning of the year ticket prices have risen by about 5% comparing to year 2019. At the same time, aviation fuel price has increased by 47%: before the pandemic aviation fuel costed 0.5 €/l and in June 2022 has been achieved a record price of ~1 €/l. Airspace and route network changes as a result of unexpected closures due to Ukraine invasion also bring challenges to airlines. Thus, fewer overflights are noticed mainly in Baltic States, Scandinavian States and Poland and more overflights are mainly in South-East Europe.


Actual and future IFR movement, % traffic compared to 2019

As of October 2022, the two majors’ slowdowns to a full traffic recovery come from the war in Ukraine and the impact of Covid 19. Eurocontrol made some assumptions on the evolution of these downturns to define some high, base, and low scenarios, impacting differently the traffic recovery until 2028.

Based on the conflict in Ukraine, restrictions on the Ukrainian, Russian, Belarusian, and Moldovan airspaces could last up to 2028. This indeed has a huge impact on airlines flying between Europe and East Asia, now obliged to fly the polar route, or over the Caucasus and Central Asia, adding on average 2 to 3 hours to the flight. The other impact of the conflict is regarding the economic situation, with a decrease in the initial GDP forecast, and inflation impacting purchasing power. According to the European Investment Bank, since the beginning of the conflict, the 2022 forecast for the UE GDP was revised by -1.2%, and -0.9% for the US. On the other hand, the inflation was revised by 2.9% for the UE and 2% for the US.

Regarding the impact of Covid 19, a full post-pandemic recovery can be expected in 2023. However, it is worth noting that as of October 2022, some countries still have impacting restrictions, for example, China requires a minimum of 10-day quarantine for all air travelers arriving in the country. Another important impact of the pandemic is the staff shortage, this forced hundreds of flights to be canceled this summer of 2022. Indeed, 2.3 million jobs were lost in the aviation industry globally due to the pandemic, hiring and training new people is a long process, and the year 2023 might still be impacted by staff shortages in high seasons.  Overall and according to these assumptions, the following low, base, and high scenarios for 2028 are based on the evolution of the European GDP, the impact of inflation, the evolution of Covid-19 restrictions, and the staff shortage, which have all been developed above.

Sources:

EUROCONTROL – Forecast Update 2022-2028

OSPREY – Russian airspace bans and impact on flight routings

European Investment Bank – How bad is the Ukraine war for the European recovery?

US Embassy & Consulate in China – Covid 19 information

Euronews.travel – Europe’s airports struggle with mass staff 

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