Australia airline capacity still below pre-pandemic levels and global growth stunted: OAG

Qantas is flying at its pre-pandemic levels but the nation’s total capacity is still down 2.6 per cent because of sluggish demand from China along with global aircraft and crew shortages.

Qantas is flying at just above pre-pandemic levels: NCA NewsWire / David Geraghty

It’s a statistic that will surprise few Australians looking to head offshore this Christmas: the nation is in the bottom half of countries returning to pre-Covid international flight levels.

Data provided by OAG shows that of the world’s top 20 aviation markets, only 10 have returned to having seat availability at or above 2019 levels, and Australia is not on that list, with its available seat capacity still 2.7 per cent below the pandemic level.

Flight Centre said there are still some areas where “pain is being felt” in the travel industry 2½ years after restrictions were lifted, with taking off from Australia being one of them.

“International capacity in Australia has been slow to recover and this has led to higher than normal airfare prices,” Flight Centre CEO Graham Turner said. “The good news for travellers is that capacity is now close to pre-pandemic levels and we are finally starting to see significantly cheaper fares.”

International airfares sold by Flight Centre in Australia in the September quarter were 10-15 per cent cheaper than 12 months earlier. Fares were still above pre-Covid levels.

Mr Turner doesn’t expect prices to keep falling but noted airlines such as Delta and some of the Chinese carriers are increasing services to Australia, while Qatar’s proposed investment in Virgin, if approved, looks set to deliver “significant benefits” to travellers.

On a global level, aviation capacity only increased 2.4 per cent from 2019. OAG chief analyst John Grant cited aircraft shortages, lack of trained crew, Russia’s war with Ukraine and the severe economic downturn in China as being key reasons, growth was stilted.

Mr Grant specifically called out the 26 per cent drop in China’s international capacity.

The situation in China – which this writer saw first-hand at a near empty Shanghai Pudong International Airport several months ago – contributed to Southeast Asian capacity being 13.1 per cent below 2019 levels. Meantime, the war between Russia and Ukraine contributed to Eastern Europe being 8.6 per cent lower.

“In Southeast Asia the much-discussed Chinese international market recovery lingers, while in Eastern Europe the ongoing situation in Ukraine is an unfortunate example of how vulnerable the sector is to other events,” Mr Grant said.

Growth is nowhere near where it could be, according to Mr Grant, due to a range of factors including a global shortage of aircraft: Boeing has been impacted by seven weeks of strike action on top of supply chain issues, Airbus has had supply chain issues and engine manufacturer Rolls-Royce has a severe backlog of orders.

Mr Grant also cited a lack of trained aviation workforce. Globally, many people left the industry when airlines all but shut down during the pandemic, and replacing them has proved difficult.

“While AI seems capable of doing most things, it can neither fly a plane nor open an emergency door, and for many airlines people are their greatest asset, which makes the current shortages in nearly every sector of the industry a worry as we head into the new year,” Mr Grant said. “That loss of skills and experience will take decades to be replaced. But for those still in the industry it’s never been a better time to ask for a pay increase.”

Then there’s problems within individual markets. Australia’s second-largest carrier, Virgin, collapsed during the pandemic and has returned to the skies without long-haul capacity, while Qatar, which has aircraft available, had its application to increase flights to Australia blocked.

Qantas Group is flying at just over pandemic-level capacity with aircraft about 86 per cent full, and expects to grow capacity further when its last A380 returns to service following its time in the Arizona desert.

Flagship UK carrier British Airways has lurched from problem to problem, the latest being an IT failure this week that saw pilots unable to take off because load sheets couldn’t be processed. The airline has also been forced to cut services because Rolls-Royce has struggled to fix engine issues impacting its 787 fleet.

In Germany, capacity is at about a decade low due to its airport fees being higher than the European average, and taxes that Ryanair and easyJet blamed for their decisions to cut capacity by about two-thirds.

Meantime, rising tensions in the Middle East have all airlines on high alert.

“While the appetite for air travel remains, economic pressures such as the cost of living, increasing taxation and the constant spectre of geopolitical events will leave most airline and airport CEOs on high alert for what’s next,” Mr Grant said.

Markets that experienced standout growth since the pandemic included the United Arab Emirates, with capacity up 15 per cent; India, which grew 12.7 per cent, and; Spain, now the largest European market, which grew 12.1 per cent.