Winter 2023

Volatile skies

Europe’s airport leader painted starkly different emerging travel patterns that may shape the next decade for the region

Olivier Jankovic, ACI Europe’s Director General, said at Routes that rising oil prices and other cost hikes could push the region into recession. At the same time, there is a flood of new low-cost airline capacity from Middle Eastern and Asian airlines that is adding stiff competition.

“Consumer confidence is up, [but] so are costs, and there are significant aircraft delivery delays for everyone,” Jankovic said. “The Eurozone likely is going into a recession.”

Europe’s airlines have recovered to only 48% of pre-pandemic levels, he noted, and 2023 passenger traffic is expected to be negative 4.5% this year and only up 1.4% next year.

“There is a change in demand from material travel to experiential travel,” Jankovic said, noting that corporate travel has not returned, and companies are choosing to attend only larger meetings overall.

Airlines in Western Europe have not fully recovered, with ITA in Italy down 29.7% in summer 2023, SAS down 21.3% and LOT Polish Airlines 18.8% lower. Meanwhile, LCCs are adding significant numbers of seats vs 2019: among them are Wizz Air (+46.9%), Ryanair (+25.4%) and Jet2 (+22.9%).

“We have a lot of capacity additions from LCC Gulf carriers, Chinese carriers, and, on top of that, Turkish Airlines expects to double its fleet to 800 aircraft,” Jankovic said.
“There are changing connectivity patterns: direct flights are rising, and hub connections have not yet recovered,” he said. “This is leading to a ‘polycrisis’ in Europe. Increasing geo-security concerns and more global fragmentation are leading to a lot of risk for all sectors and [we] expect the same for the airline sector.”

“We will have volatility, uncertainty, complexity and ambiguity for Europe’s airports,” Jankovic said, noting that there is a €27 billion (US$28.6 billion) capital expenditure shortfall for the region’s airports. This could lead to “a viability challenge for small airports,” he noted.

Jankovic said airports should seek to become “enerports” by adding solar farms and providing green energy for their regions and building resilience and business opportunities. He also noted that the current slot system for managing busy airport flights is 30 years old and outdated because off-peak periods have fewer flights and, therefore, “wasted capacity”.

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