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Within Europe, we observed charter demand for March this year finish 6% down compared to 2022 – the same year-over-year decrease as we saw for January and February. So far April is showing a similar trend – I expect it to finish around 6% down as well.
These months have all reflected a common pattern, that early booking has been higher than last year. People have been able to plan further in advance, meaning there has been proportionally less last-minute demand.
The above column chart shows that the requests sent by European companies in Jan-Mar 2023 has longer lead times than in 2022.
The summer peak is coming in Europe
May is slightly different. Whilst demand for the month has so far totaled 12% above 2022’s levels, we see fewer early bookings compared to 2022 than previous months. The rate of decrease in year-over-year performance is lower too. May is always a month when we see European seasonality ramp up, and 2022 was even more so. How May performs should offer good indications for the rest of the summer.
Our best estimate is that May will end with a similar decrease versus 2022, but it could surprise us.
US demand levels decreasing
Within the United States, the year-over-year declines are greater. Avinode usage was huge in winter 2021-2022, and the peak we saw was even larger than the actual increase in charter flights due to the challenges to find available lift.
This year, March ended 27% down versus 2022, and April and May are showing similar trends. This is driven by an actual decrease in charter demand compared to the very high levels in 2022, together with the increasing supply in Avinode this year.
Whilst still early to be making predictions, the summer months look different. This is driven by the fact that sourcing issues had started to relent by June 2022 and demand started its return to more normal levels. That’s why we expect June and July 2023 to show more modest declines versus 2022.
How to read the line charts: The coloured lines each represent a month. The vertical axis is the year-over-year percentage difference in the number of journeys being sourced through Avinode.
The horizontal axis is the days before the end of the month, stretching from 180 days to 0. By following each line, you can see how demand is building for the month. This gives us early indications of how each month will perform.
Comments Off on What demand to expect for the festive season?
The US domestic market has boomed this autumn. The Avinode demand index climbed steadily since the turn of the year and reached new heights over Thanksgiving, matching the record number of flights that took place. Our forecast – based on a mix of prior year data and forward-looking request data – is indicating that Christmas and New Year traffic could be even greater. The watch out is how reliable Christmas 2020 can be as an indicator for Christmas 2021, given the very different factors at play – including the vaccination roll out, commercial aviation schedules and the community spread of omicron.
Looking at the festive period in detail, Boxing Day – which falls on a Sunday this year – is the big travel day, with return journeys focused on Sunday 2nd January. There is a large flow of demand taking folks back up to the colder northern states after some time in the Florida sunshine. Trips to ski breaks in the mountains are showing a similar pattern but with some earlier demand too – arrivals into Aspen are very strong on 17th and 18th December. The big international markets are Mexico, the Bahamas, Sint Maarten, Turks & Caicos, and the Dominican Republic.
With high demand and low supply mixing with high fuel prices, it is no surprise that rates are increasing. The Avinode hourly rates pricing index for the US has been rising since the start of the year and is at record levels for all aircraft bar super midsize jets, which peaked in October. With such record activity and increasing rates, it has become more challenging to get quotes that reflect the final price of a trip.
To counter this effect, we added a price estimate column in search results last year, creating transparency between our brokers and operators. When sorting on estimate price, it gives buyers a better idea of the final price. In this challenging market situation with low supply and high demand, I recommend using the estimate when searching for aircraft.
Intra-European charter demand through Avinode has followed its typical seasonal pattern but with a shallower slope down from the summer peak than previous years. The Christmas holiday peak is expected to follow the same daily pattern as in the US, with an added busy travel date on Sunday 9th January. Looking further forward, the UK to Alps ski peak on Saturday 12th February – with return a week later – is already taking shape. Chambery and Innsbruck are most popular.
From Russia, demand is focused on Sunday 2nd January with the return taking place on Sunday 9th January. France and Switzerland are in the top 3 most popular destinations, with the Maldives in second place. Dates between 25th-29th December are also busy, but for this period it is the Maldives and Dubai that are the most popular destinations. Despite their popularity, the Maldives and Dubai are down 30-50% compared to last year – ski holidays are back in demand.
Hourly rates within the intra-European market are slightly higher than November 2019, having rebounded throughout the summer. Rates are most robust in the Entry Level Jet category – up around 10% on 2019. Hourly rates are also high for Light Jet and Super Light Jet categories, up around 4%.
Of course, the big question mark is how much tighter travel restrictions may get. Undoubtably the tougher restrictions are, the longer it will take commercial aviation to recover. This could mean a continuing opportunity for private charter to woo new clientele into 2022.
Comments Off on High demand and low supply = higher rates
Various commentators have spoken about the huge surge of private charter movements in July 2021 compared to 2019 data, particularly in the USA. The increase in demand coupled with constrained supply is causing hourly charter rates to recover from their COVID lows and even surpass the levels seen pre-pandemic for some categories.
In the US domestic market, heavy and ultra-long-range jets are recovering but still behind where they should be. Smaller categories of jet are all doing well and are broadly similar to pre-pandemic rates. The category really surpassing historical rates is super midsize jets (up 15%), an interesting symmetry given that this category dropped by far the most in the immediate aftermath of COVID restrictions in Spring 2020. The operators of these aircraft have been very reactive to market conditions and optimizing their rates for them.
The patterns in the intra-European market are a little different. Here rates have been recovering rapidly in July but are still below pre-pandemic levels for the summer season. The exception is for entry-level jets, which have rocketed in recent weeks to around 7% above pre-pandemic rates. This could be caused by first-time flyers entering the market choosing the most affordable jet option and so driving up the prices. As with the US market, it could also partly be due to the operators of this category more quickly optimizing their revenue when the opportunity allows.
Intra-European charter demand through Avinode has just reached its summer peak and is now trending down again; it appears that we are returning to the traditional summer pattern of 2019, rather than the elongated demand into late August that we saw in 2020. However, the Russia to Europe market is still following its 2020 curve; looking at the routes being requested, we should expect to see extra demand from Russia to the Adriatic and Eastern Mediterranean in the next couple of weeks.
Within Europe, Greece has been the star attraction this summer. Early demand patterns, compared to at the same stage of 2019 and 2020, suggest that will continue until at least mid-September. France, Italy, Spain, and Germany all show robust demand compared to 2019 over the rest of the summer. Compared to normal levels, UK demand to France remains poor for the next few weeks, with domestics taking up some of the slack.
In the US, demand for charter through Avinode continues to increase, albeit more slowly than a few weeks ago. When trips are being requested for has changed. The percentage of trips being requested within 4 days stands at 43% in July 2021 – compared to 34% in July 2019. These figures support the commentary that it is proving challenging to source charter to meet jet card demand in such a low supply environment.
It is the shortest duration trips that are recovering most strongly versus 2020, for example between Las Vegas and California. Last year the most popular charter routing was from the Southeast up to the Northeast, whereas this summer that pattern has reversed and demand is from the Northeast again. Of the major cities, demand from airports around New York City and Dallas is most notable compared to 2020, for the next 5 weeks. Travel to the Caribbean is led by Mexico, the Bahamas, and the Turks & Caicos.
Despite the threat of the spreading Delta variant that caused cases to rocket again in the UK, pent-up leisure demand has been released in Western markets. European demand is robust but still very seasonal. In the USA the boom is continuing and with business travel still to fully return, it looks like we could be witnessing a step-change in the size of the US market – further increasing its significance in our global industry.
15 months on from the emergence of COVID in China, its prevalence continues to have a huge impact on demand trends. The recent outbreak in India saw demand for travel from the country increase to levels never seen in Avinode, entering the top 10 of requested departure countries; it was driven by demand to the UAE, which increased 900%, and to the United States. Demand for travel from India continues for the next 2 weeks. Even as demand patterns normalize, we will no doubt continue to see sudden peaks due to outbreaks for the duration of the pandemic.
Right now, Intra-European charter demand through Avinode is tracking along similar curves to 2018 and 2019. Demand from the large UK market has struggled all year due to lockdown, but the addition of Portugal to the “green list” of countries, from which one can avoid quarantine, has seen demand rocket for the school holiday week, further boosted by the Champions League final featuring two English teams taking place in Porto on 29th May. Despite the need to quarantine on return, Spain is top of the demand rankings from the UK for travel until 1st August, with Portugal second and domestic travel third. From the other major European markets, domestic travel is most popular from France, Italy, and Spain. From Germany and Switzerland, the sunshine of Spain sees it take the top spot.
COVID resulted in hundreds of events being cancelled in 2020. As limited crowds return to events in 2021, we are seeing events driving more demand peaks. The Europa League final in Gdansk caused a modest peak this week, and the Monaco Grand Prix saw nearly five times as much demand into Nice on Friday 21st May, compared to the week before. Events are returning and that is great news for private charter – although the Olympics is a notable exception.
From Russia, the story is a little different. The winter and early spring saw international demand focused on longer haul travel to the UAE and Maldives. That has now stopped. With the weather improving closer to home, demand has shifted to the Eastern Mediterranean for the summer. For the next couple of months, demand is up year-over-year to Turkey, Greece, Cyprus, Italy, and Montenegro. Outside the top 5, demand to France and Spain is struggling. Domestic demand for Russia on Avinode has been high all year, and that trend will continue as well. Moscow to Sochi and St. Petersburg are the top routes.
Private charter has been recovering well in the USA, dominated by a strong domestic market and robust demand to Latin America. Florida is the star performer, caused by travel up to the Northeast and intrastate, but it is encouraging to see that for the next couple of months, demand is up year-over-year from all fifty US states. Spreading demand is resulting in some airports that weathered the pandemic well last summer seeing decreases year-over-year, including KPBI, KBCT and KAPF. KVNY and KTEB are back at the top of the rankings. Demand from Vegas is up 172% compared to last year.
International travel is coming back too. Over Memorial Day weekend, demand from the West and Central areas is headed to Mexico whilst demand from the East is headed to the Bahamas and the Turks & Caicos. Demand to further afield is still slow; demand for transatlantic travel from the US is down on last year until at least mid-June. The US is still the main market for travel from Canada, but Mexico is showing the strongest year-over-year performance, up until late-June.
Thankfully, charter rates are also recovering – the long-term improvement trend continues in the United States. Rates have been particularly buoyant for super-midsize aircraft in the last two weeks, comfortably above pre-pandemic levels.
In Europe, rates are recovering too – particularly for larger aircraft – although they remain a long way below pre-pandemic levels.
Demand is being driven by different factors in different parts of the world. Pent up leisure demand is there and starting to be released in some markets as the weather improves. Events are gradually returning. Elsewhere, COVID continues to ravage, and demand is anything but typical. Domestic and short haul demand is still dominating as entry restrictions remain for so many countries. Demand is coming back in summer 2021… but normality remains elusive.
The charts below are rolling 14-day indexes of demand for trips requested through the Avinode marketplace within the regions specified. Each chart shows relative demand within the region for 2021 in blue, 2020 in green, 2019 in dark grey and 2018 in light grey, with day of year along the horizontal axis. Being indexes, the exact figures on the vertical axis are not relevant, although it is worth noting that the axes do start at zero.
Right now, Intra-European charter demand through Avinode is not too different to previous years. This statement conceals some large year-on-year changes. Smaller categories are more resilient than heavier categories and geographically, the recovery is uneven.
Lockdowns, Brexit and a lack of skiing mean that the worst year-over-year statistics are for travel from the UK and Switzerland. Charter demand out of Spain has been up at the start of the year and looks set to remain so for at least the next two weeks, driven by travel to the UK and Germany. Portugal is also seeing some very spikey demand to the UK in relation to restrictions on travel from there. Demand between European countries shifted rapidly due to restrictions in 2020 and that pattern looks set to continue in 2021.
Over the winter, travel rules within Europe have seen demand pick up to longer-haul destinations – the UAE, Maldives, and Caribbean islands. Broadly, those trends continue. Demand to the UAE is consistently elevated all the way until Easter whilst the Maldives is spiking on February weekends. The Bahamas and Barbados look to be taking early demand for Easter from Western Europe, whilst Zanzibar is popular for the next couple of weeks from Eastern Europe.
Demand from Russia & CIS
In the second half of 2020, charter demand from Russia & CIS grew considerably in Avinode and that pattern has remained in 2021. The main drivers have been domestic travel within Russia (Sochi to Moscow #1), trips to the UAE and the Maldives. Whilst it is too early to comment on long term domestic demand changes, the data for early Q2 suggests that demand to these sunspots will continue into April.
Domestic demand within the USA
Travel within the United States through the Autumn and Winter has been far more resilient than in Europe. We saw record demand through Avinode during the Thanksgiving and Christmas holiday period, likely driven by an influx of new leisure customers to the charter market in 2020.
Looking forward, demand curves for US domestic travel are slightly ahead of last year’s level for the next 3 weeks. The flows showing positive year-over-year trends are those that did OK in 2020 – primarily travel to and from Florida. Aspen and Salt Lake City look like popular arrival points for some Valentine’s Weekend snow. Hawaii is consistently more popular than last year. Demand for short flights is having a tougher time; demand within California is down 56% for the next 4 weeks. Demand within the Northeast of the country is similarly depressed.
Global trends and indications
Looking north of the border, Canadian demand through Avinode has pivoted away from domestic and US travel and is focused firmly on trips to the Caribbean for the next couple of months. The Turks & Caicos and Sint Maarten are popular from both Canada and the USA, which is also seeing year-over-year demand increases to Puerto Rico, the US Virgin Islands and Costa Rica.
Elsewhere in the world, demand in Q1 from the Middle East is being driven by the previously highlighted trends from Dubai to Europe & Russia. Demand for travel within the Middle East is broadly down, except for Qatar. A wide range of African countries that saw minimal demand this time last year are seeing requests for charter – highlighting the continued role that business aviation must play in a world of heavily reduced commercial airline schedules.
Pricing index for intra-European trips
Charter rates have adjusted to reflect the shifting demand environment. The above chart is a rolling 14-day price index based on quotes in the Avinode marketplace, normalised to 1st January 2018, for travel within Europe. Since the pandemic struck, we have seen a couple of rate decreases and recoveries. Rates are now trending down again, after a relatively positive Christmas.
Pricing index for US domestic trips
In the United States, the drop in hourly rates during the immediate aftermath of travel restrictions was greater – and the recovery has been more sustained. Rates peaked over Christmas but have started to trend down again as we have got deeper into January. However, the Autumn suggests that if demand recovers, rates should follow.
Another year of fluctuations?
In many ways, private charter has been a relative bright spot in terms of industry recovery globally – although it is an uneven recovery that has not yet got back to where it was. Back in 2020, vaccine “passports” were often suggested as being the solution to seamless travel in a pandemic world. However, countries that are winning the race to vaccinate, like Israel and the UK, are desperate to avoid new strains entering their territory. How much international travel opens from these nations depends on the severity of return quarantine measures implemented – and right now, it does not feel like anyone could confidently say what these will be in the long term.
2020 was a year of fluctuations; expect more of the same in 2021.
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Internal demand within Europe
The charts below are rolling 14-day indexes of demand for trips requested through the Avinode marketplace within the 4 regions specified. Each chart shows relative demand within the region for 2020 in green, 2019 in dark grey and 2018 in light grey, with day of year along the horizontal axis. Being indexes, the exact figures on the vertical axis are not relevant, although it is worth noting that the axes do start at zero.
In Europe, seasonal leisure demand was clearly pushed later into the summer. Trip requests fell sharply when the holidays ended, and demand is now more consistent with previous years. Of the major country markets, Germany and Italy have the most positive year-over-year outlooks for the next few weeks.
Demand for travel within Europe looks to be most challenging from mid-November, before recovering as we approach Christmas. Some of that leisure demand looks to be heading Transatlantic. Demand curves to the Caribbean from Europe (and particularly the UK) are approximately 50% ahead of their last year positions for travel from mid-November till mid-December. Barbados, the Bahamas and Saint Vincent are the most requested destinations.
From Russia to Europe
We observed a similar late summer boost from Russia to Europe. Turkey was the biggest beneficiary year-over-year from Russia and demand curves for this country pair are still ahead of last year over the next four weeks.
The biggest upcoming peak for the Russian market is to the UAE around the 24th October, with over 200% more requested trips on this country pair than at the equivalent point last year. The Maldives have an arrival spike the following weekend. Within Russia & CIS, demand has been notably higher during August and September than previous years, although no match for the 2018 World Cup spike.
Domestic demand within the US
In the United States, the initial spring peak in demand was matched in intensity by an early summer surge. Since this time, demand passing through Avinode has slowly decreased, but remains at a substantially higher level than in prior years. Many in the industry have commented on a shift in the passenger make up to first time private flyers, travelling for leisure, rather than businesspeople. New flyers’ enquiries have probably contributed to this increase in demand through Avinode.
Looking forward, demand curves for US domestic travel are slightly ahead of last year’s level for the next 5 weeks. The markets driving this behaviour are the East Coast corridor to and from Florida, as well as a notable year-over-year increase in travel to remoter states. Trip requests for departures to and from Montana, Idaho and Hawaii have all increased by over 100%, with Wyoming and Colorado not far behind. Demand to states in the Mountain time zone is highest from the Northeast US – but is elevated from all corners of the country. Demand for shorter flights is still down.
Internationally, there are positive trends for travel to Latin America from the US for the next six weeks, mostly driven by trip requests to Mexico. Other popular destinations are Costa Rica, Sint Maarten and the Turks & Caicos islands. Unfortunately, the major US – Bahamas market is still seeing fewer trip requests than last year.
Internal demand within the Middle East
Trip requests through Avinode for travel within the Middle East has been much higher than previous years, as shown in the chart. Increased charter demand from the UAE has driven this, particularly to Saudi Arabia. Looking forward, there are major demand peaks forming from Dubai around the 1st and 8th November for travel to Russia, matching the flow in the other direction a week earlier. A smaller demand peak to the UK is appearing around the 31st October.
Intra-European pricing index
Charter rates have adjusted to reflect the shifting demand environment. The above chart is a rolling 14-day price index based on quotes in the Avinode marketplace, normalised to 1st January 2018, for travel within Europe. There was a steep and sudden fall in hourly rates during the spring which recovered somewhat due to returning demand in August. Rates have recently settled slightly lower than that level. Entry level jets have beaten the trend, with hourly rates now similar to pre-COVID levels.
US domestic pricing index
In the United States, the drop in hourly rates during the immediate aftermath of travel restrictions was greater – although this was heavily influenced by a very significant decrease of 29% in hourly rates for super midsize jets. They have now recovered to only 1% below pre-COVID rates, outperforming most other categories.
The summer taught us that leisure demand increased quickly when travel restrictions were lifted. The return of business travel looks to be a more gradual process. It remains very challenging to predict what patterns will emerge as we head towards winter in the Northern Hemisphere.