Boom in holiday travel 'shows no sign of ending'

German airline Lufthansa said bookings for the third quarter and the rest of the year exceed 90% of the pre-pandemic level, with the summer season extending into October

Ryanair said last week demand looked robust for the rest of the summer, but cautioned that higher borrowing costs as interest rates rise may curb spending.

The boom in holiday travel shows no signs of ending, German airline group Lufthansa has said, as advance bookings for this winter and next year were already a double-digit percentage above the year-earlier level.

The outlook will underscore optimism in the tourism and airline sector that the recovery in demand that started last year after covid lockdowns may be more permanent, as people splurge on holidays rather than goods.

"Demand will remain exceptionally strong for the foreseeable future," Lufthansa chief executive Carsten Spohr told journalists during a conference call as the group published better-than-expected quarterly profits.

Concerns have grown that the surge in demand — and resulting strong earnings — could lose momentum in the autumn season as high inflation starts to squeeze passenger spending.

Lufthansa is not seeing any slowdown, Mr Spohr said. Bookings for the third quarter and the rest of the year exceed 90% of the pre-pandemic level at Lufthansa, with the summer season extending into October.

Other airlines have struck a more cautious note.

Ryanair, Europe's largest airline by passenger numbers, said last week demand looked robust for the rest of the summer, but cautioned that higher borrowing costs as interest rates rise may curb spending, particularly as ticket prices rise.

Aer Lingus and British Airways owner IAG said the outlook for summer travel was encouraging, although it was "mindful" of uncertainty in the wider economy.

For the German airline, Mr Spohr said an unimpeded trend towards more premium-class flights, especially among leisure travellers, had underpinned yields and he expected ticket prices to remain at current levels for the foreseeable future.

That will help offset business travel, which has lagged leisure.

It is picking up again though. The number of business passengers at Lufthansa's airlines has recovered to about 60% of pre-pandemic levels, which the group sees continuing to rise.

"Based on surveys and feedback we receive directly from our corporate customers, we forecast a further strong increase for the rest of the year," Mr Spohr said.

"Already, business travel has recovered to over 70% on the transatlantic route, for example," he said. 

Meanwhile, Ryanair rival Wizz Air's capacity growth will be slower than expected as it grapples with supply chain and engine issues, the company said, sending its shares down more than 6%, even as it reported higher profits in line with consensus. 

• Reuters