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Ascend by Cirium Weekly Team Perspective: Everybody loves surfing

August 5, 2022

What will things look like for the aviation industry when the summer is over and we head towards winter?

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Chris Wills Head of Consultancy Operations, Senior ISTAT Appraiser

By Chris Wills, Head of consultancy operations at Ascend by Cirium

As the song goes, that is until the wave crashes. This seems an appropriate analogy as we enjoy the holiday month of August, but what will things look like for the industry when the summer is over and we head towards winter?

Back to surfing and wave riding. The wave in question is one of recovery, so how is this wave going to roll? There are some really positive signs, a number of airlines are reporting revenue levels at, or above, Q2 2019 levels and positive margins (although not matching 2019 for most). Traffic numbers continue to recover despite the stall earlier this year, with global capacity expected to be only around 20% below 2019 by the end of this month. 

This recovery wave is flowing into aircraft Market Values and Lease Rates, albeit predominately for the single-aisle assets. 

So, can we all hang ten or is there a wipe-out approaching? Just as with the uncertainty of the sea, the outlook for the industry, and the world at large today, is very unclear.

While the Northern hemisphere summer season is going well there are increasing areas of concern. Human resource constraints are limiting further growth and revenue generating potential of carriers in a number of locations. Higher costs, notably fuel, is an increasing challenge for airline margins as well as for all consumers. High inflation, looming recession, increasing interest rates, exchange rates, geopolitical events/risks, the continuing impact of COVID-19, and aircraft production challenges encompass just some of the global challenges.

How do we navigate the turbulent seas – or skies? The answer is Data.

While tidal flows, wave heights, winds and weather forecasts are less helpful for predicting the aviation market, aircraft utilisation, airline schedules, aircraft fleet dynamics and aircraft values are just some of the metrics we can observe to gauge the outlook for the rest of 2022 and in to 2023. Ascend by Cirium continues to monitor these and more on a daily basis. So, while the future may be uncertain, we can at least form some insight on the outlook from an empirical perspective.


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