More seats and flights around the world. In Australia? Less so

Macquarie finds local capacity is still well below pre-pandemic levels. By November, that will change.

Tourism is booming in the US, new research shows. Picture: Al Drago/Bloomberg

Australia and New Zealand are the laggards in the post-pandemic global travel recovery, with capacity in the region still 20 per cent below that in 2019, Macquarie says.

But no region is back at 100 per cent capacity, with North America the closest at 93 per cent, more than two years after the pandemic forced a global travel shutdown.

In a research note to clients, the investment bank crunched the numbers on August airline trends across the Americas, Europe, Asia and Australia and New Zealand, finding that North America was followed by Europe at 88 per cent, Asia at 81 per cent and Australia and New Zealand in last place at 80 per cent of 2019 levels.

Airline schedules are still taking a hit from industry constraints, keeping capacity from fully recovering, the analysts warned.

“Airlines have been cutting forward capacity largely due to operational and labour constraints across the sector and to drive improved service levels. All major regions reduced both short-term and long-term capacity over August,” the analysts wrote. “Latest commentary indicates capacity for many airlines through the third quarter of 2022 and into the fourth quarter will be around 5 to 15 per cent below 2019 levels.”

The capacity constraints come as airlines and travellers battle months of travel chaos, with strikes and staff shortages causing mayhem in airports in the Northern Hemisphere’s summer season.

London’s Heathrow, one of the world’s busiest airports, is among those that has extended its capacity limits through to October following discussions with airlines.

While overall capacity numbers are yet to hit pre-pandemic levels, the Macquarie analysts found domestic capacity was faring better than international, with travel within Asia already back at 100 per cent of 2019 numbers, as other regions play catch up.

Across Australia and New Zealand, domestic capacity sits at 89.4 per cent but is tipped to be back to 2019 levels by November. North America, meanwhile, is expected to lift its own domestic capacity from 94.3 per cent to 97.9 per cent in the next three months, while Europe is the outlier, with capacity expected to decline from 96.5 per cent to 91.7 per cent by November, the analysts told clients.

On the international front, North America and Europe currently have the highest capacity, at 87 per cent and 85 per cent, while ANZ and Asia lag at just 55 per cent and 36 per cent.

“Looking out three months to November 2022, forecast capacity in North America and Europe is 101 per cent and 93 per cent, with ANZ and Asia expected to increase to 72 per cent and 59 per cent,” the analysts wrote.

 

As airlines push their capacity numbers higher, there is some good news for US travellers: ticket prices are on the way down after climbing over the past year, the analysts noted. “Average domestic ticket prices were 11 per cent above 2019 levels in July 22 and up 21 per cent versus 2021, but have fallen 12 per cent since May and are following the downward trend in energy prices,” the investment bank said.

Traditional leisure agents are still outperforming online and corporate against the 2019 numbers, the analysts added. Ticket sales volumes in the US leisure market are at 104 per cent for traditional travel agents, 77 per cent for online travel agents and 72 per cent for corporate. “The key risk for the broader sector remains a material decline in travel demand and volumes driven by the softening macro outlook in key global regions,” the analysts warned.

Macquarie has an outperform rating on ASX-listed Corporate Travel, Webjet and Qantas.

Originally published as More seats and flights around the world. In Australia? Less so