Clearing THE AIR

Brexit uncertainty and consolidation are not taking the shine off a relatively buoyant period for airlines. Gary Noakes examines the state of the market

Summer’s here, but Brexit fall-out continues, meaning predicting travel patterns is a headache for buyers and airlines.

The view out there seems to be one of short-term uncertainty set against a general backdrop of confidence and investment. However, some research makes alarming reading; a poll of travel managers from Alphawise Morgan Stanley in March found confidence tumbling since November. Then, around 26% of buyers predicted a spend increase of 6-10%, but this proportion dipped to about 17% six months later as Brexit limped on.

IATA’S latest stats highlight a fall in global passenger growth from 8% in the first half of 2018 to 4.5% in February. It’s not all gloom however, with Europe leading the world, recording expansion of 7.6% in January and February, making it the strongest performing region for the fifth consecutive month.

Europe’s airlines are averaging an almost 82% load factor and Mark Bevan, Business Travel Direct’s Head of Strategic Relationships, said: “The market seems pretty buoyant and positive and there’s quite a lot of airline investment. Inbound traffic is busy as well.

“Our customers seem to be investing. I’m not sure it can be linked to Brexit, but transatlantic is busy – maybe corporate clients are looking further afield for business.” He welcomes a range of business route additions, including British Airways’ Pittsburgh service and Virgin Atlantic’s Sao Paulo and Tel Aviv routes.

Some leaders worry there are still too many carriers, particularly short-haul, in continental Europe. Lufthansa Group Chief Executive Carsten Spohr called Europe’s short-haul sector “overheated” and believes 2019 will start a process that leads Europe’s aviation scene to resemble the US, China and the Gulf, where three carriers dominate in each. “We are seeing the final phase before consolidation,” he says.