Global airline capacity plummets on week, seen near bottom: OAG

New York — Scheduled airline global flying capacity fell to 26.6 million seats for the week May 4-10, a dramatic contrast to the 109 million in the same week last year, digital flight information provider OAG said Monday.

This is after some brief green shoots of recovery last week when global airline capacity increased for the first time in 10 weeks, by 2% week on week, OAG data showed. This held below 30 million seats, a nosedive from the typical 110 million seats expected for this time of year, OAG said last week.

"Whilst the rate of weekly capacity continues to decline it does at last feel as though we are getting closer and closer to the bottom. After all, how much further can capacity fall," OAG's John Grant said in the note.

As May gets underway, many airlines have pinpointed the month as the beginning of the upside, with airlines adding capacity. Current scheduled capacity shows potentially 19 million seats being added back over the course of May 11-25, but Grant said he did not expect these levels to come to fruition.

Domestic capacity gains will continue to pull airlines up off rock bottom, with domestic capacity accounting for 82% of all scheduled operations this week.

All eyes have been watching North Asia, with China specifically gearing up for the five-day Labor holiday which began Friday, which drove most of the regional growth. Many analysts continue to re-emphasize consumer confidence and cheap air fares to entice passengers back into the market.

Europe is next in line for signs of recovery as some countries tentatively ease lockdown restrictions, which has supported nearly a 4% increase in capacity on the week, including Italy, Germany and the UK, but total capacity for Western Europe remains just above 10% of the January levels, the note said.

Jet fuel prices continue to remain heavily under pressure, with prices dipping below bunker fuel at the end of last week. Jet fuel FOB FARAG barge prices fell below 0.5% marine bunker fuel on Thursday, and Friday's assessments showed the FOB Rotterdam 0.5% at $160.50/mt Thursday, a $6.25 premium to jet barges.