Aviation continues to recover from Covid, but risks remain on the horizon

The war in Ukraine and inflation threaten post-pandemic recovery for the aviation industry 

Shannon Airport expects to welcome from now 75,000 passengers through its doors during the festive period up to New Year’s Day. Pic Arthur Ellis

Airports in Munster seem to be bucking the trend when it comes to post-pandemic recovery in the aviation industry, figures show.

Shannon Airport expects to welcome 75,000 passengers through its doors during the festive period up to New Year’s Day, marking the busiest Christmas period for the airport in three years as aviation was grounded due to pandemic restrictions.

“It's wonderful to see passengers arriving home to loved ones or heading off this week, with some experiencing a family gathering for the first time in a few years,” said Shannon Airport group chief executive Mary Considine.

Its bumper winter schedule, which began at the end of October, is topping pre-pandemic services by 20%, according to the airport.

In Q4, the airport said it is seeing a 91% recovery on 2019 passenger figures for the same period.

There has been strong pent-up demand for travel this year, as the airport sees its weekly winter departures increase by 20% compared to the winter season of 2019,” said Ms Considine.

Cork Airport

Meanwhile, Cork Airport expects to welcome more than 135,000 passengers from mid-December to January 6.

The airport forecasted about 2.2m passengers for the full year of 2022.

“Cork Airport is well on track to becoming the first State airport to recover passenger traffic to pre-pandemic traffic levels of 2.6m in 2019,” the airport said in a statement earlier this month.

However, as the pandemic travel restrictions wound down, new economic headwinds emerged this year which could pose a threat to further recovery for the aviation industry.

The European region of Airports Council International (ACI) revised its passenger traffic forecast for the European airport network, showing passenger volumes in 2023 are set to fall 9% below pre-pandemic levels and that a full recovery has now been pushed back to 2025, rather than 2024 as previously forecast.

“Passenger traffic has made a strong comeback since last spring and has so far been very resilient in the face of increasing geopolitical and economic headwinds,” said Olivier Jankovec, director general of ACI Europe.

However, we now expect the passenger traffic recovery to level off moving forwards, with the timeline pushed to 2025 before Europe’s airports finally get back to where they stood before Covid-19 hit. 

"Next year, we will still miss 220m passengers, meaning our volumes will only match 2017 levels,” he said.

The European body representing 500 airports in 55 countries cited the war in Ukraine and inflation as current challenges hitting the aviation industry.

Ryanair

The share price for Ryanair, Europe’s largest airline, experienced a brief hike on February 10, when it was at its highest point for this year, as tensions were building in Ukraine.

Then, days before Russia officially invaded Ukraine on February 24, the airline suffered a gradual slump in share price and volume.

In addition, inflationary pressures are set to weigh on demand, with air fares having increased sharply throughout Q3 and Q4. Higher regulatory costs will also result in sustained inflationary pressures on air fares.

Ryanair does not see inflation as a pressing issue though, as Ryanair DAC chief executive Eddie Wilson recently told the Irish Examiner people would continue to use the airline due to its low fares. 

Before the financial crisis, people parked around the corner from Lidl and Aldi and skulked their way in, and now it’s a badge of honour to say you buy your stuff there. I could see the same thing happening with Ryanair,” 

he said.

Ryanair has delivered 15% growth on pre-pandemic numbers in Ireland this year, and has recovered faster than any other EU airline.

On the supply side, tight capacity management mainly by full-service carriers and the permanence of travel restrictions to China will also limit further traffic growth, said the ACI. 

Airports and airlines across Europe are experiencing additional challenges including strike action from workers looking for salary increases to cope with surging inflation.

Ryanair recently agreed on a four-year pay deal with Irish pilots in an effort to prevent work shortages during the pandemic which put recovery under strain.

Dublin Airport remains the favourite for travellers coming in and out of the country, which is another potential headwind for other airports across Ireland. 

Earlier this year, when Dublin Airport was crumbling under the pressure of pent-up demand and a lack of staff, Limerick Chamber called for wider aviation policy to be introduced. 

“The laissez-faire approach of the State has allowed Dublin Airport grow to unnecessary scale,” said Limerick Chamber CEO Dee Ryan.