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Global airline passenger capacity in Feb to fall 24% from prepandemic levels: OAG

Highlights

Domestic capacity recovers at faster pace than international

Southwest Pacific, Southeast Asian regions lag in passenger numbers

Global airline passenger capacity is expected to fall 8.1% on the month in February, and would still be 24.2% below prepandemic levels in 2019, flight and data analytics company OAG said in its latest report, with most regions yet to see a meaningful improvement since the emergence of the contagious omicron variant.

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"With the exception of North and Southern Africa, all other regions will see capacity fall this month compared to last month and globally capacity is down by 8.1% on last month," OAG said in its monthly report, adding that part of this effect was due to January being a longer month than February.

OAG noted that only Central and Western Africa passenger capacities have recorded levels above prepandemic 2019, with a 5.5% increase in seats. The Southwest Pacific and Southeast Asian regions remain the furthest behind, with capacity operating at below 48.5% and 46.7%, respectively, compared to February 2019.

In line with this, analysts and traders have said the aviation sector in the West has generally staged a faster recovery versus the East, with the main difference being that the former has the advantage of a strong domestic air travel market that has supported recovery for flight demand.

"Aviation recovery since the start of the pandemic has taken a different trajectory for domestic and international capacity, with domestic capacity recovering faster and sooner," it said.

OAG said capacity in both domestic and international markets in February has yet to recover to November-December 2021 levels. Domestic capacity has fallen back to 10% of levels in 2019, deteriorating from 7% last month, while international capacity was hovering at 47% below prepandemic levels.

The travel data provider added that the US is edging closer to a recovery, with February's capacity sitting at just 5% below pre COVID-19 levels of 2019. Passenger capacity in China has bounced back into recovery, up 8% on the month, while capacity levels in India, Indonesia and Brazil are currently 16%-21% below 2019. Canada, one of the largest domestic markets, is still the furthest away from recovery.

Still, OAG said the global recovery outlook for the aviation sector remains affected by omicron restrictions and onerous travel protocols.

Limited supply supports Asian jet fuel

Industry sources said supply issues are expected to continue to drive Asian jet fuel/kerosene market fundamentals despite demand requirements from the downstream aviation sector remaining at middling levels for the region.

"Despite ongoing anxiety over international travel, global jet and kerosene demand is seen rising by 1.3 million b/d [on the year] in Q1," S&P Global Platts Analytics said Feb. 10.

Tight regional supply has worked to lift the overall Asian jet fuel/kerosene complex over second-half January to early-February, with this propelling derivatives as well as spot cash differential values to multimonth highs.

An open arbitrage to move Asian jet fuel barrels Westward, as well as refineries continuing to keep a tight lid on production, may continue to lend a measure of support to the product, a few sources said. However, others said a still slow recovery path ahead for the aviation sector -- owing to prolonged omicron-related restrictions that have stifled air travel demand in Asia -- may dull the outlook for the Asian jet fuel market.

The FOB Singapore jet fuel/kerosene cash differential jumped 21 cents/b on the day to plus $1.45/b to the Mean of Platts Singapore jet fuel/kerosene assessment at the Asian close Feb. 10, S&P Global Platts data showed.

The strength was similarly reflected in the derivatives curve, where the backwardation in the front-month March-April jet fuel/kerosene time spread widened 16 cents/b day on day to plus $1.57/b on Feb. 10.