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‘Tremendous’ demand will give lift to airlines in 2022, predicts Moody’s


Moody's says the aviation industry is preparing itself for take off

Moody's says the aviation industry is preparing itself for take off

Moody's says the aviation industry is preparing itself for take off

The world’s airlines will continue to benefit from pent-up demand this year even as rising Covid infection rates play havoc with carriers, according to ratings agency Moody’s.

It said its global outlook for passenger airlines remains positive, despite flight cancellations over Christmas and into the new year.

Moody’s said it reckons the total number of cancelled flights around the world between Christmas Eve and January 4 amounted to more than 20,000.

However, it said the cancelled flights represent between 5pc and 10pc of airlines’ daily schedules.

“While high-profile, the flight cancellations pose only a temporary problem for the airlines, and the cancellation rate will decline in upcoming weeks,” noted Moody’s.

“January is the lightest flight schedule and air travel month of the year. Many airlines have reduced their January schedules because of the impact of the Omicron variant on staffing.”

Carriers including Ryanair previously scaled back their January schedules as the number of Omicron cases rose and people hesitated to book flights.

“We expect the financial impact of the cancellations to be modest, marginally lowering operating cash flow in these weeks.

“Incentive compensation to support flight crew staffing will be the major cost pressure point,” it added.

“The staffing challenges caused by the rapid spread of the Omicron variant will ease as daily infection rates decline, enabling airlines to quickly improve their operating performance relative to the past few weeks.”

The agency said that despite recent events, it continues to expect air passenger volumes to “snap back strongly” during 2022 and into 2023.

“There remains tremendous pent-up demand for air travel, be it leisure, long-haul international or business,” it noted.

“In the US, for example, the Transportation Security Administration reported the volume of travellers passing through airport checkpoints this holiday season ran at about 85pc of 2019 levels,” it said.

It added that bookings have surged when restrictive policies are lifted.

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“For example, once European countries began to relax Covid-related travel restrictions last summer, air travel there increased to more than 65pc of 2019’s levels.”

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