European airlines and hotel chains are reporting bookings recovering to levels barely seen since the start of the COVID-19 pandemic, led by demand for shorter trips.
The easing of curbs and bottled-up travel demand has led to an abrupt upswing in short- and medium-haul trips to Europe from nearby countries.
“There is a lot of pent-up demand. People want to see their families and travel again,” said Phil Seymour, president of IBA Group, a UK-based consultancy and aircraft valuation firm.
That echoes soaring domestic demand in the United States.
“The big overlay is that air travel demand is back and it is back in a massive way,” Sean Egan, Chief Executive of the Egan-Jones Ratings Company, told the Airfinance Journal conference.
Challenges remain in the form of rising costs and staff shortages causing flights to be cancelled.
Some airlines have promised more than they can deliver this summer, delegates warned. Even so, airlines expect a return to profitability.
British Airways-owner IAG expects to be profitable from the second quarter onwards and for the year as a whole, it said on Friday. That’s despite having to cut capacity in the first quarter to avoid disruptions.
“Premium leisure continues to be the strongest performing segment and business travel is at its highest level since the start of the pandemic,” said IAG Chief Executive Luis Gallego.
IAG, which also owns Iberia, Vueling and Aer Lingus, said the easing of UK travel restrictions especially had improved demand. It saw “no noticeable impact” from the Ukraine conflict.
IAG forecasts passenger capacity to be around 80% of 2019 levels in the second quarter, rising to 90% by the fourth.
Flights between Europe and North America will be close to full capacity by the third quarter, it said, though analysts say that contrasts with a bleak picture on most long-haul routes.
“We are finally seeing genuine shoots of progress, with profits expected to sprout from next quarter,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
IAG’s bullish outlook followed similar guidance from other European airlines.
Germany’s Lufthansa is looking to return to an operating profit this quarter as demand for travel rises with the easing of COVID-19 curbs, it said on Thursday.
Air France-KLM has seen a recovery in ticket sales and strong summer bookings, it said on Thursday.
Source: AAP