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The airline industry fears a drop in demand after the summer

Will consumer confidence and the desire to travel continue beyond the good weather? At the start of the high season, the question moved the annual congress of the European Airports Association (ACI Europe) in Rome this week. The summer period promises to be by far the best since the start of the health crisis that has hit the aviation sector hard since 2020. Some companies like Ryanair and countries, notably Greece, have already regained or even exceeded their daily number of flights in 2019, according to Eurocontrol.

In the old continent, air traffic at the end of June reached 86% of the level of the same period in 2019, said the pan-European surveillance agency, which in its most optimistic scenario expects up to 95% in August.
Despite the sharp increase in ticket prices and the disruptions that lead to long delays at several airports (Amsterdam, Dublin, Frankfurt, etc.), strikes at certain airlines and air traffic controllers, companies are filling up with reservations for the next few weeks.

But what happens when the umbrellas are folded? “The jury is still deliberating,” replies Olivier Jankovec, Managing Director of ACI Europe. “Visibility is low because there are many uncertainties.”
“Europe has entered a war economy, a fairly severe recession is looming, inflation is at record highs… How will all of this affect consumer confidence?” he.

increase in the price of kerosene

The same intuition for Henrik Hololei, Director-General for Transport and Mobility at the European Commission. “Buckle up, it’s going to wobble,” he told ACI Europe delegates. “In a few months we will enter a period of uncertainty the likes of which we haven’t seen in a decade and it is economic activity’s worst enemy,” he said.

“Russian aggression in Ukraine will not go away,” but “will last for a very long time. Energy prices are very high, we risk shortages of labor, lack of energy […] and even groceries in some parts of the world, plus interest rates are rising for the first time in a decade,” said Henrik Hololei.

Kerosene prices have doubled in a year, and a lack of refining capacity is exacerbating the explosion in crude oil prices. But fuel accounts for around a quarter of airlines’ operating costs, which are forced to pass them through ticket prices as their cash flow has dried up from two years of the health crisis.

“However, we are seeing the return of strong demand, people wanting to take their vacations,” after health restrictions were lifted, stressed Eleni Kaloyirou, general manager of Hermes Airports, manager of Larnaca and Paphos airports in Cyprus, where the high tourist season lasts until November. But “we’re worried about next year”.

Persistence of Covid-19

The same prudence from Athens Airport’s general manager, Yiannis Paraschis, beyond a summer that promises to be another award for Greece. He fears that “the increase in energy prices and inflation will amputate a large part of the budgets of European households”.

“In my country we know how to survive inflation, but you are just beginning to understand what inflation means,” Kadri Samsunlu, head of Istanbul International Airport, said to himself. “Very worried” about the occurrence of this phenomenon in Western Europe. “It could hurt consumer confidence and once it’s gone we don’t know what will happen,” he warned.

Another dark cloud hanging over European air traffic in the medium term: a possible recovery of the epidemic. “The covid has not gone away and it is not seasonal flu,” warned Henrik Hololei, noting that “an increase in infections in Europe due to subvariants BA.4 and BA.5” is even more contagious.

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