European airlines hit by new lockdowns, economic contraction

A number of European countries, including France, Germany, UK, Italy, Belgium, Ireland and Greece have reintroduced lockdown-like restrictions in response to sharply rising COVID-19 case numbers. This will hit economies: a survey of economists by the Financial Times (2-Nov-2020) predicts eurozone GDP growth of -2.3% in 4Q2020, reversing the 3Q2020 rebound.

Aviation capacity continues to suffer as a result. Europe’s year-on-year cut in seat capacity widened to -64.7% in the week of 2-Nov-2020, versus -62.1% the week before.

This is the biggest reduction in capacity of all the world’s regions, 3.8ppts below Middle East, on -60.9%. Africa is -56.9%, Latin America -51.2%, North America -50.2%, and Asia Pacific is -38.9%.

Moreover, the outlook for European aviation is that it will get worse before it gets better. Monthly capacity in Europe recovered from 10% of 2019 levels in Apr-2020 to what turned out to be a peak of 55% in Aug-2020. Based on filed airline schedules, it is set to fall for the third month in a row in Nov-2020, to 37%.

Lockdowns and economic contraction could take it lower still.

Summary:

• Europe: 10.1 million seats, -65%, vs 28.6 million a year ago. Europe has the lowest percentage of 2019 capacity among the world regions.
• Monthly seat capacity in Europe as a percentage of 2019 levels is set to fall for the third month in a row in Nov-2020.
• Europe’s weekly COVID-19 case numbers are rising sharply, leading to renewed lockdowns, which are likely to damage economic growth.
• Renewed lockdowns hit demand for air travel both directly and through weaker economies.