Airlines face test after adding back transatlantic flights

Airlines have restored flying capacity between the US and Europe at a rapid rate, setting up a test of passenger demand amid spikes in coronavirus infections on both sides of the Atlantic that threaten to lead to new restrictions on travel.

While the number of available seats remains a fraction of pre-pandemic levels and is likely to stay that way for years, transatlantic capacity bottomed out in May, according to data from aviation consultancy Cirium.

Airlines added back capacity every month since the nadir, with published schedules for August showing nearly four times the number available in May.

The 1.9bn “available seat miles” between the US and Europe in May was far less than 18.6bn a year earlier, but month-on-month increases have been large from this low base. The metric measures an airline’s carrying capacity and is calculated by multiplying the number of plane seats by the distance travelled.

Airlines increased capacity by 40 per cent in June and 67 per cent in July, and published schedules for August show another 60 per cent increase.

But experts said the August capacity was likely to drop, as airlines cancel flights closer to departure, even before accounting for concerns over an uptick in Covid-19 cases in Europe this week.

Airlines were publishing “optimistic schedules”, said Rob Morris, global head of consultancy at Ascend by Cirium. “There is a probably 5 to 10 per cent over-report in the schedule because they can cancel [a flight more easily] than add one in.”

Since they do not know what demand will be, he added, “they’re making it up as they go along”.

Line chart of Year-over-year change in available seat miles, % showing Transatlantic capacity dives

The rate of new Covid cases in the US recently eclipsed the daily peak in March in the early days of the pandemic, as the disease spread in sunbelt states. In Europe, the British government was criticised by tour operators and passengers for reimposing quarantine on travellers from Spain at the weekend after a rise in case numbers there.

During normal times there are approximately 2,500 weekly flights between the US and Europe in winter and 4,000 in summer, said Mark Duell, vice-president of FlightAware, a flight data website. For the week starting July 13, there were 1,497.

Projected capacity for August remains 78 per cent lower than a year earlier. That drop is why four airline chief executives wrote to government officials on both sides of the Atlantic last week to ask for a co-ordinated testing regime that might speed recovery for this high-profile segment of the aviation market.

Transatlantic routes bring in less total revenue for US carriers than domestic ones, but they are some of the most profitable routes.

“It’s not quite a licence to print money, but you have strong corporate demand, you have strong leisure demand, you have diaspora going back and forth all the time,” said John Grant, executive vice-president at aviation consultancy OAG. “It had been, until very recently, a very nice market. Then it all fell apart.”

Executives and analysts are forecasting a multiyear slump for aviation, with international travel trailing a recovery in domestic flying.

“I can’t see us getting back to the same level of capacity that we traditionally see in a summer season before summer 2023, or even perhaps summer 2024,” Mr Grant said.

The International Air Transport Association, an industry body, said this week it did not expect a recovery in global traffic until 2024.

Fear of getting infected on flights or at airports has limited enthusiasm for air travel even when it is possible. President Donald Trump announced on March 11 that American borders would close to European travellers. Four months later, with Covid-19 cases surging in the US, the EU has banned travellers from the US. Exceptions apply for returning citizens.

Last week’s letter, signed by the chief executives of United, American Airlines, IAG and Lufthansa, said a co-ordinated testing regime could rebuild confidence and limit the need for quarantine, which deters travel.

“We believe it is critical to reopen air services between the US and Europe,” they wrote. “Nobody will benefit from a prolonged closure of this most indispensable corridor for global aviation.”

Chief executives Scott Kirby of United and Doug Parker of American said on earnings calls last week that they had yet to receive a response.