Tuesday, 5 January 2021

2021 Capacity Starts Slowly - Can We Close Our Eyes For A Few Months Please

The flattest seasonal holiday season has been reflected in the latest global capacity which has broadly remained around sixty million seats a week since the middle of December. The early Christmas present of breaking that sixty million, was just that, a present and this week’s 59.6 million is perhaps likely to be as good as we can expect in the next few weeks, writes John Grant at OAG.

The first month of every year is always one of the slowest for demand with no real leisure activity aside from a slippery slope or two in Europe and no major public holidays to celebrate before Chinese New Year. No surprise then that for the first time in a long while, forward capacity for next week and beyond is actually below this week’s level and that is before network planners’ factor in the next planned series of lockdowns. Oh, happy days!

Scheduled airlines around the globe are currently offering a range of eye-watering fares in the hope of jabbing the market back into recovery mode although sentiment seems to be towards no real recovery before the second half of the year in demand. The whole industry appears to be holding its breath for good news and the reopening of borders and international travel.
Four of the five largest regional markets are reporting capacity reductions week on week. North America where with nearly 10% of all capacity has been shaved off and 1.4 million seats dropped compared to last week. North East Asia reflects a similar pattern with a million fewer seats operating although the region remains at close to 75% of the capacity operated in the same week last year.

Scheduled Airline Capacity by Region

The fastest growing region week on week is Lower South America where capacity has increased by some 12% with another 266,000 seats placed back into the market. We have noted before that Latin America generally has been around six weeks behind the Covid-19 curve’s impact in other markets and this growth may shrink away in the next few weeks with some countries reintroducing quarantine requirements on arrival last week.

Eastern Europe is also apparently growing again, with regional week on week growth of 7% and some 141,000 more scheduled seats. I say apparently because much of that growth is from Romania with Wizzair, Blue Air and Tarom all increasing services; quite how many of those will be cancelled at less than seven days’ notice will be interesting to watch.

For the Caribbean region the next few months are usually the peak demand period as a combination of snowbirds migrate from North America and Europe to find some sun. The early indicators for the season are not great; capacity this week is down by 9% compared to last week and 40% down on this time last year. Impressively the US Virgin Islands are currently showing some 10% capacity growth for the first quarter of this year against 2020 whilst at the other end of the spectrum Cuba stands at some 63% below last years scheduled capacity for the first three months of 2021.

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