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Inflation, War Hindering Air Transport Recovery

Daily European air traffic with routes affected by the Russia – Ukraine conflict. Source: FlightRadar

Inflationary pressures, the ongoing Russia-Ukraine war and airport-airline capacity to handle rapid growth are expected to impact post-Covid air transport recovery, according to the latest updated forecast released by aviation experts Eurocontrol.

More specifically, Eurocontrol said it expects flights in 2022 to be 16 percent below pre-pandemic 2019 levels at around 9.3 million, but up by 49 percent over 2021.

Source: Eurocontrol

Since the beginning of 2022, flights have recouped 82 percent of 2019 traffic levels. Ticket prices from January to August this year increased by 5 percent over the same period in 2019 and fuel prices soared by 47 percent.

The revised outlook, which replaces the June 2022 forecast and now covers seven years, pushes the achievement of a 92 percent (of 2019 levels) recovery in flight traffic to 2023, in the best case scenario.

“We are optimistic about traffic recovering to around 92 percent of 2019 levels next year. But there are still significant downside risks that could affect the recovery,” said Eurocontrol Director General Eamonn Brennan.

According to Eurocontrol’s “high scenario”, moderate GDP growth, a limited impact on demand from inflation, good passenger confidence and limited capacity constraints in 2023 at airports and airlines can see improved traffic figures.

Source: Eurocontrol

The baseline scenario sees weak GDP, inflationary pressure and high jet fuel prices impacting demand as well as lower passenger confidence/propensity to fly.

Lastly, the “low scenario” takes into account the impact of several risks, including a number of states in recession in 2023, dwindling demand for travel due to inflation, Covid-19 developments, environmental concerns as well as staffing/capacity issues at airlines and airports in 2023.

“We have seen strong demand this summer but this has been held back both by the capacity of the sector to handle the rapid growth and also by the impact of the war in Ukraine. As a result we expect to see about 9.3 million flights this year, 49 percent more than in 2021 but still 16 percent fewer than we had in 2019. We are optimistic about traffic recovering to around 92 percent of 2019 levels next year. But there are still significant downside risks that could affect the recovery,” said Brennan.

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