Economic turmoil hits airline winter capacities

OAG has revised its latest analysis of worldwide airline schedules in light of the economic crisis.

It said continuing problems in the US, Europe and Asia are impacting airline operations with worse than expected declines in airline capacity this winter.

Flights and capacity within Europe are showing worsening cutbacks in the fourth quarter of 2008.

Figures for intra-Europe flights are now 5% lower than for quarter four in 2007. Back in August, OAG had originally forecast a fall of 2.7%.

Seat capacity is now 5.6% lower, compared with the previous analysis drop of 2.8% a couple of months ago.

US domestic flights are set to fall by almost 11% and capacity by 9% in the fourth quarter of 2008 compared to a year ago.

The US domestic market will account for 21.4 million of the cutback in available seats, or 46% of the global decline, and a staggering 59% of the global drop in frequencies with 265,000 fewer flight

Earlier indications for Asia are not as bad as feared, although still worse than the global figure with a 6.5% fall in capacity and a 7.1% drop in the number of flights.

On transatlantic routes, there has been a capacity reduction of 2.9% for transatlantic, reversing the earlier schedule analysis of 2% growth.

Globally, winter schedules show a 5.2 % decline in capacity and a 6.1% decline in the number of flights. OAG’s earlier analysis in August showed a 7% drop for both measures.

The latest figures reveal that the world’s airlines will offer 46.3 million fewer seats for October, November and December 2008, and 451,000 fewer flights.

Steve Casley, chief operating officer of OAG, said: “Our revised analysis of scheduled airline activity reveals a number of significant changes from two months ago, reflecting the dynamic nature of the airline industry compounded by significant economic turmoil in the global financial markets.

“While the global picture still shows a 5% drop in global capacity and a 6% drop in flights, this is somewhat less dramatic than the 7% fall our database showed previously. However, with economic problems now impacting both Europe and Asia this picture could change quickly as airlines are extremely vulnerable and quick to react to economic downturns and subsequent shifts in market demand.

“The scale of the decline in the US market is worse than the previous schedule analysis showed, with airlines taking 265,000 flights out of operation this quarter. When you consider that the combined cuts from all the world’s airlines totals 451,000 flights, then it really puts America’s domestic capacity decline into perspective.”

“We are seeing an interesting regional balance emerging, with European travelers facing double the number of capacity cuts identified in the August analysis, and Asian travelers with half as many now that all carriers have filed their winter schedules,” continued Casley.

“We shouldn’t let this apparent improvement in Asia undermine the fact that 15.3 fewer million seats will be available within Asia compared to this time last year; a staggering figure by any measure. Asia has been the center of growth for many years, and this decline is a stark reminder that the global economic crisis is taking its toll on aviation and air travel.”

“The situation at a regional level is having a big impact on intercontinental air service. While there are relatively minor declines in operations between Europe and Asia, both the transatlantic and transpacific routes have shifted from growth to a 3% decline in just a few weeks. This is all the more remarkable when you consider that airlines have a tendency to deploy their assets from domestic services to long-haul international markets in an economic downturn.”

By Bev Fearis