Reopening China to international travel will help speed up global air traffic to pre-pandemic levels by the middle of this year, according to one of the world’s largest aircraft leasing companies, even as a lack of new jets continues to hamper the industry’s full recovery. .
Avolon, the world’s second-largest jet lessor, said that after “a 70 percent recovery in passenger traffic last year led by . . . Europe and North America, Asia will increase growth in 2023, helped by the reopening of China.”
For every two airline capacity seats added worldwide, one is in Asia, according to a report published by Avolon on Monday.
The company’s predictions are the most optimistic but almost three years after Covid-19 brought the industry to a standstill.
Executives generally warn that a recovery to 2019 levels won’t come until 2024 at the earliest. China’s recent decision to reopen its borders, however, appears to be the last step needed to trigger a recovery in passenger traffic.
The decision led to an increase in flight bookings, although they are still below pre-pandemic levels. Outbound international flight bookings between December 26 and January 3 jumped 192 percent compared to the same period a year earlier, but were still 85 percent behind pre-pandemic levels, according to industry data provider ForwardKeys.
Aviation executives expect booking levels to continue to rise as airlines in China hire staff and rebuild international flight schedules after three years of dormancy, although they worry that travel could be delayed by test rules imposed on air passengers traveling from China by the US, UK. and other European countries.
Avolon’s optimism was echoed by other industry executives. Aengus Kelly, chief executive of AerCap, the world’s largest lessor, said airline customers were all reporting strong demand, despite the economic crisis.
“What you hear is that consumers have bought the things they need. And that’s why you see difficulties for other companies that provide services and certain goods that are consumed on a large scale in Covid. The demand for those other goods is pushed forward. The opposite is true for travel,” he told the Financial Times.
As a result, “does air travel compete in people’s wallets for income that can be used much less”, he added.
AerCap, he said, has seen more demand for aircraft in the past year than at any time in its history. It signed 570 lease agreements in 2022, mainly for aircraft to be delivered in 2023 and 2024.
“We’re not going to lease a lot of planes if there’s not a strong demand that the airlines can see. They’re going to put money in,” Kelly said.
However, while demand for flights has returned, executives warned that production problems at major manufacturers, Airbus and Boeing, could still dampen the recovery.
Avolon warns that delivery delays are becoming “endemic”. About 2,400 of the planned planes have not been built because of the pandemic, he said.
AerCap’s Kelly said Boeing and Airbus were “under tremendous pressure” and “will not meet production targets”.
The company is the world’s largest seller of used aircraft. Last year, half of AerCap’s aircraft sales went to airlines, according to Kelly, amid heightened concerns about new aircraft delivery delays.
Airlines “can’t take the risk that during the summer, they don’t have the elevators they need to transport passengers”, he added.
Airbus and Boeing both increased aircraft production last year to meet rising demand from airlines. Airbus is to deliver 661 jets in 2022, an 8 percent increase, while its US rival increased output by 41 percent in the previous year to 480.
Supply chain constraints, however, forced Airbus, which has been rapidly ramping up production of its best-selling A320neo jet, to pull back on delivery targets.
The company still plans to raise the A320neo output rate to 75 per month by mid-decade – higher than the pre-pandemic rate – but has admitted that the narrow-body model is now sold out until 2029.