The airline industry has enjoyed a strong rebound from pandemic lows, but new data from UBS suggests the ascent might be hitting a patch of mild turbulence.
According to UBS's Evidence Lab unit, global capacity was still up by a mid-single-digit percentage year-on-year through mid-November, but momentum slowed compared to pre-pandemic levels in 2019 (a key benchmark for the industry’s recovery).
In the US, capacity dropped from 115% of 2019 levels in October to 110%. China followed a similar glide path, with capacity softening to 106% from 117% the prior month.
UBS said the pullback in both regions was primarily driven by a deceleration in domestic capacity.
Europe told a similar story, with capacity decelerating across most major markets. Germany and Italy saw the sharpest declines, while Spain stood out as the lone bright spot, posting a slight sequential uptick.
None of this screams crisis, but rather suggests the post-Covid boom in air travel may be reaching cruising altitude.
Earlier this week, easyJet PLC (LSE:EZJ) revealed capacity rose 9% year on year, with seats up 4%, while revenue per available seat kilometre (RASK) fell 3%. For its new financial year, the budget airline expects ASK capacity to grow by around 7%.
At its results earlier this month, British Airways parent International Consolidated Airlines Group SA (LSE:IAG) reported passenger RASK was down 2.4% at reported rates but insisted that travel demand "remains strong". While the group was "well positioned", it was "mindful of the macroeconomic and geopolitical backdrop".