The lucrative North Atlantic flight corridor that links European tourism and business meccas like Paris and London with the US has been starved for traffic for the past 18 months, depriving some of the world’s biggest airlines of revenue from their most profitable journeys.
Now carriers including Emirates, United Airlines Holdings Inc. and British Airways are gearing up again, with plans to boost transatlantic seat capacity by 40 percent collectively in the eight weeks through August 23, according to data from flight tracking firm OAG.
It’s not a sure gamble. The Delta variant of the coronavirus has spread to more countries, clouding the outlook for a further progress toward a reopening of the vital routes.
Since late June, European Union countries including Italy, Spain and Greece have allowed American tourists to enter again if they’ve been vaccinated or meet other conditions like testing Covid-free. Starting as soon as late July, the UK—home to Europe’s most important transatlantic hub at London Heathrow airport—separately plans to allow arrivals from the US and other countries rated medium for Covid-19 risk to come in without quarantine if they’ve been inoculated.
But the US hasn’t yet reciprocated, so Europeans still aren’t allowed to vacation in New York, Los Angeles or Miami. With the delta variant adding a new layer of risk, hopes are fading that the Biden administration will act before the summer high season is over. Calls are growing to ignore the rising case loads and allow vaccinated people to travel, since health officials are increasingly confident that they are at little risk of serious illness or spreading the disease.
“Our two continents have been kept apart during the pandemic by sometimes justified, sometimes unjustified actions by our political masters,’’ Henrik Hololei, director general for transportation at the European Commission, said at a joint event with US officials this week. “Now, when the vaccination process is well under way on both shores of the Atlantic, there should be no excuse not to open up for people who want to travel, see their relatives and friends, or just new and old places.”
The biggest airlines that ply the North Atlantic are all boosting capacity in anticipation of a surge in demand. British Airways, owned by IAG SA, has set plans to more than quadruple the number of seats it will offer over the coming weeks, according to data from OAG—setting it up for a potential letdown if there’s no breakthrough. The carrier said it continues to review its schedule, and urged the UK “to open up more low-risk countries, let vaccinated people travel without restriction, and to urgently provide a realistic date for these crucial steps for the industry to work to.”
Carriers including Deutsche Lufthansa AG, Air France-KLM, American Airlines Group Inc. and Delta Air Lines Inc. also rely on the corridor for profits. In 2019, North Atlantic flights generated 40 percent more business- and first-class ticket sales than the nearest contender, according to OAG.
“The peak of the summer is already here so airlines are pretty desperate to get things moving,” said John Strickland, an aviation consultant.
Global aviation capacity jumped by 3 percentage points in the past week, and stands at 65 percent of 2019 levels, according to Bloomberg’s weekly flight tracker, which uses OAG data to monitor the pulse of the comeback. Further improvement was seen in Germany, the biggest source of visitors within the European Union, as well as Croatia, Greece and Belgium. Each country saw capacity surge by more than 20 percent week-to-week. The bloc has been relaxing border restrictions between member-states, as well as from outside the EU, and is steadily catching up to other regions as its vaccine rollout progresses.
Airlines have increased capacity in Canada by 22 percent as it prepares to implement an easing of border rules. The US, powered by its huge domestic market, stands at 87 percent of 2019 capacity, even as staffing issues slow its rebound. Pilot shortages there could potentially spread to other countries, said John Grant, chief analyst with OAG.
“The key learning for all airlines is that the recovery has been quicker than many had expected, especially in domestic markets where there are limited travel restrictions,” Grant said. “No airline can afford to enter the recovery phase and be cancelling flights,” though with load factors still soft rescheduling passengers shouldn’t be too much of an issue, he said.
In the Middle East, the annual Eid holiday is expected to generate a surge in traffic, with more than 450,000 people moving through Emirates’ Dubai hub in July. The long-distance specialist said this week that it may ramp up transatlantic capacity even further, depending on changes in the feeder markets in its network.
Asia continues to be held back by zero-Covid restrictions and its lagging vaccine rollout, which has left the region vulnerable to the delta variant’s spread.
There is some movement toward targeted reopenings. In Thailand, the government is pushing ahead with plans to jump-start its crucial tourism industry. Starting Thursday, inoculated tourists from low- and medium-risk countries such as the US and Spain will be allowed to holiday on the popular resort island of Phuket without quarantining. If successful, the experiment could lead to a wider reopening of the Thai tourism industry as soon as October.
At the same time, though, Australia’s strong flight recovery is under threat. Local lockdowns to counter outbreaks have hurt the domestic recovery, while the corridor with New Zealand has now been suspended.
European comeback
The degree to which Europe can extend its recovery in July and August hinges on governments’ response to the delta variant, as well as their ability to coordinate on technology.
As of July 1, digital Covid certificates went live across the EU, allowing for ease of movement between member-states for people who can show they’ve been fully vaccinated, recovered or tested negative for Covid-19. But each country has ultimate control of its own borders, and there has been a push led by Germany to close ranks against the delta variant after it spread in the UK Over the past week, Germany imposed quarantine on arrivals from member-state Portugal, after the Iberian country was slow to introduce its own isolation rules on Britons.
Malta, Spain and Italy are among the EU countries that have also tightened restrictions on British visitors. That’s stunted the UK’s own rebound, and helped to curtail the advantages that were expected to flow from a vaccine rollout that has now reached 67 percent of the population with at least one dose. For now, airlines such as Ryanair Holdings Plc, Wizz Air Holdings Plc and EasyJet Plc have shifted capacity from Britain into the EU.
Meanwhile, UK Prime Minister Boris Johnson and his German counterpart Angela Merkel will on Friday discuss opening up travel, including vaccine certification coordination. An issue that caused Brits to be turned back from flights to Malta this week was resolved after the Mediterranean island country said it would recognize the UK’s NHS health app, which stores vaccination records.
Ryanair remains hopeful, amid the reports the UK may loosen quarantine rules for its residents this month. It’s aiming to almost double capacity in July from June’s 5 million passengers, Chief Executive Officer Michael O’Leary said in a Bloomberg TV interview. He said bookings are strengthening as tourists from Germany, the Benelux and Scandinavia head to the beaches of Portugal, Spain, Greece and Italy.
“We expect that to continue into July and August, which should make for a reasonable recovery,” he said.