Despite a good start to summer, the European aeronautics industry is worried – Business & Finance
ROME: Air traffic is booming this summer, but once the European holidays are over, will passenger demand hold?
The question was at the center of the Airports Council International (ACI) Europe’s annual congress in Rome this week, which took place at the dawn of the approaching high season.
The summer period promises to be by far the best since the start of the coronavirus crisis which has hit the airline industry hard since 2020.
Some airlines, like Ryanair, and countries, including Greece, have already recovered or even exceeded their number of daily flights in 2019, according to Eurocontrol, a pan-European air traffic agency.
Across the continent, air traffic was last week at 86% of the same period in 2019, Eurocontrol said, and is expected to reach up to 95% in August according to its most optimistic estimate.
And companies are filling seats for the coming weeks despite the sharp rise in ticket prices, long queues at various airports from Frankfurt to Dublin to Amsterdam and strikes by flight attendants, pilots or controllers aerial.
But after that?
“The visibility is low because there are a lot of uncertainties,” said Olivier Jankovec, managing director of ACI Europe.
“We are now in a wartime economy in Europe, we have the prospect of a fairly severe recession, we have inflation at record highs, so how is all of this going to play into consumer sentiment…the jury is out still not there.”
European Commission director-general for transport and mobility, Henrik Hololei, echoed that thought.
“We really have to tighten the seat belt because there is going to be a lot of turbulence,” he told delegates.
“We are entering (…) a period of uncertainty that we have never known in the last decade. And that is of course the greatest enemy of the company, ”he said .
Hololei listed the war in Ukraine, high energy prices and shortages of energy, food and labour.
“We also have interest rates rising for the first time in a decade,” he said.
The price of jet fuel has doubled over the past year as a shortage of refining capacity has added to the boom in crude oil prices.
Fuel accounts for around a quarter of operating costs for airlines, which have passed them on to consumers in ticket prices as they seek to fill coffers emptied by the two-year health crisis.
Still, strong demand has returned, confirmed Eleni Kaloyirou, managing director of Hermes Airports, which manages Larnaca and Paphos airports in Cyprus, where the peak tourist season runs until November.
“People want to take their holidays,” she said, acknowledging, however, “that we are worried about next year”.
The general manager of Athens International Airport, Yiannis Paraschis, has also expressed his fears that “rising energy costs and inflation are consuming a large part of the disposable income of European households”.
Istanbul International Airport manager Kadri Samsunlu expressed concern about the effect of inflation in Western Europe.
And if consumer confidence is shaken, “we don’t know what will happen to demand,” he warned.
The last unknown hanging over European air transport in the medium term is a possible new coronavirus epidemic. “Covid hasn’t gone away, nor is it a seasonal flu,” Hololei warned.