Global airline capacity is forecast to grow by 1.6% this year and by 4.0% compared to 2019.
Schedule analysts OAG says while some regions are experiencing rapid growth parts of Southeast Asia and the Southwest Pacific are still facing difficulties in their capacity recovery. In this country, a Forsyth Barr analysis shows Air New Zealand’s total capacity fell on the prior year, with its three-month rolling capacity to Apr down 6% year-on-year. Although NZ is now getting many of its A320/21 fleet back from the engine shops quicker than expected, the carrier’s capacity for the remainder of the calendar year is scheduled to be 94% of 2019 levels, as it continues to be impacted by engine maintenance issues.
. . . Flight To Profit
OAG says since C-19 airlines have become consistently profitable, which is necessary to support future investments The report says ‘wealthier’ airlines such as United, IAG, Delta, Emirates and Ryanair are growing richer while others continue to struggle. While it seems that a slowdown in the global economy is expected, the first half of the year appears to have been better than many feared. IATA’s latest predictions for the year are for net profits of USD36 billion and a net profit margin of 3.7%. Passenger revenues are expected to soften against the high-tide mark of 2024 as a little more competition comes to the market, although at the same time average load factors are expected to rise to 84%. NZ’s latest 12-month load factor is 83.6%. But NZ has forecast a pre-tax profit drop to between $150 million and $190m which will be reported in Aug, well down on $222m in the last financial year.
…Geopolitical Lens
OAG says that with ongoing tension in various regions the market is vulnerable to political power plays. “The whole aviation sector craves political stability and a calm market where politics are not considered a risk to operations,” it adds. For many airlines, the industry is based around the USD, and a weakening of the dollar is good news for all carriers. With the price of oil having been well below last year’s levels (despite the recent spike), the combination of these two factors provides a significant cost saving for airlines, just as demand may be slipping slightly.
