Despite an initially rocky start to the post-pandemic recovery of leisure-based air travel, 2023 is shaping up to be a landmark year for how the aviation industry can pick itself up again after the hammer blow of COVID.
Late 2020-2022 – Slow and not-so-steady recovery
Even as the global aviation industry stalled in the face of the widening pandemic in 2020, by the end of that year, many regions had relaxed their travel restrictions, and pent-up demand from holidaymakers meant that passenger numbers slowly began to grow once more. However, 2020 was still a disastrous year by any measurement, with only 1.8 billion commercial airline passengers travelling for the whole year, compared with the peak of 4.5 billion in 2019.
In 2021, a trend of cautious restraint took hold in leisure travelers across the world, as repeated flareups and full-blown outbreaks of covid saw scores of flights cancelled on a daily basis at key travel hubs. A ‘wait-and-see’ approach became the norm for millions of people, translating into a relatively slow climb back up to 2.185 billion by the end of 2022 – less than half of pre-pandemic peak levels.
2023 – The Tide has Turned
Emerging travel figures for the first half of 2023 show a general attitude among consumers that the worst effects of the pandemic are truly over and that people are ready and eager to commit to flying again. Relaxation of airport vaccine and health safety restrictions, normalisation of ticket prices (despite rampant global inflation), and several months of stability have all helped ensure that sentiment towards leisure air travel remains positive.
This is all converting into higher passenger numbers. By April 2023, the global ‘load factor’ – the percentage of available seating capacity that has been filled with passengers – hit 82.6% of pre-pandemic levels. The strong showing of the first six months points towards 2023, reaching 4.35 billion passengers, which is tantalisingly close to the record of 4.54 billion in 2019. Recovery in terms of actual revenues is accelerating, too, as Revenue Passenger Kilometre (RPK) growth rates are expected to hit 25% in 2023 compared to 2022.
Leisure dominates business travel
Another notable trend forming is the sluggish recovery of business air travel. The Economist has noted how the market has contracted due to widespread changes in corporate travel policies, pressure on firms to be more sustainable (while also saving on operating costs), and the rise of blended business-leisure travel. Overall, business travel rebounded to 75% of its pre-pandemic level in 2022, but further growth remains stubbornly sluggish.
For now, the strong performance of the leisure segment means that seats lost to regular business travellers are being made up by holidaymakers. However, a continued lag in business air travel will hurt premiums at some airlines more than others, given the high-profit margins they stand to make on upgraded fares. Already, some domestic and international players are working hard to position themselves to attract premium leisure travellers and those likely to pursue a blended business-leisure style of flight experience. Time will tell if this is sufficient to make up for those seats lost to the global trend of corporate cutbacks in business travel.
Regional differences – North America bounces back while Asia travel struggles to return to form
Recovery levels are, unsurprisingly, not occurring evenly across the world. Political, economic, and cultural considerations continue to markedly affect how people in different countries view their leisure prospects and decisions on how and when to get away for a much-needed break.
The US is leading the charge, with air travel levels now exceeding those of 2019. According to the MasterCard Economics Institute, pent-up demand in North America for reliable and accessible international holidays is pushing leisure fliers toward Europe, with Germany, France, and Italy all claiming a significant market share in 2023.
Europe is performing reasonably well, hovering at around 92% of pre-pandemic levels in June. However, in Asia-Pacific, (international) traffic is just below two-thirds of its 2019 level. At the same time, Asia is still the world’s largest aviation market and the one with the highest growth potential. Leisure travel to and from China is on the rise again after the stringent lockdowns and closed borders of 2022, representing a strong source of recovery for both the regional and global aviation markets.
Overall, it’s safe to say that both the logistical and health-based concerns of passengers worldwide are receding as they look forward to relatively uncomplicated flying once more. The challenge for airlines and airports now is to learn from the covid years and commit to producing reliably safe, smooth, and uninterrupted flying experiences that make the most of what emerging technologies can offer.
