OAG says that the Atlantic is a market that has continued to go from strength to strength over the years as airlines have added new destinations
Europe is headed to see another busy summer this year as tourists, especially from United States across the Atlantic Ocean, head in large numbers to the region, says a report by aviation data aggregator and analysis firm OAG.
In its analysis, OAG says that the market between North America and Western Europe has never been hotter and 2024 will be a record breaker with nearly 140,000 scheduled flights, marking a growth of 6 pc on last year’s record breaking traffic and it is also 8.5 pc higher than the 2019 levels.
OAG says that the Atlantic is a market that has continued to go from strength to strength over the years as airlines have added new destinations. It adds that travel demand has always been linked to economic activity and growth. It adds that until the last decade there was a classic “multiplier” of demand to GDP between countries. In recent years, the linkage in that “multiplier” has been tested by many external factors, however, one thing is clear, exchange rates can see a market switch almost immediately.
It says that as Europe seems flooded with US visitors for the second year in succession, the driver is, undoubtedly, exchange rates with the strength of the US Dollar against both the Euro and Pound Sterling. It says that while in December 2020, USD 1 bought EUR 0.82, today it is worth EUR 0.92, an appreciation of 12 pc in purchasing power of the US visitors to Europe. Similarly, the USD has also strengthened by over 10 pc against the GBP.
OAG says that airlines have recognised that swings in exchange rates can rapidly move the area of sale demand. The Atlantic is now full of US tourists capitalising on the strength of the dollar with markets such as Italy, Spain and France benefitting.
The report adds that whilst airlines meticulously plan their networks and fleet orders years in advance, they equally need to be flexible enough to respond to changing geopolitical circumstances. For many airlines their long-haul fleets are in a period of evolution with an increasing use of new generation aircraft operating across the Atlantic.
This summer 62 pc of all scheduled airline services will be operated by the three most popular aircraft types, namely the Airbus A330 and Boeing B777 and Boeing Dreamliner B787.
In comparison, OAG says, 10 years ago those three aircraft types operated just 20 pc of all flights, with the B767 the second most popular aircraft operating in 2014. Classic aircraft types such as the B747 now account for just 1 pc of all transatlantic services with Lufthansa the sole operator, while the A380 is only operated by British Airways, Lufthansa and Emirates who operate some flights from southern Europe to the USA.
OAG says that Lufthansa is the “classic” transatlantic operator using A340s, A380s and B747s on their range of services as well as more modern A350s and B787s.
The increasing choice to use next generation wide-bodied capacity provides airlines with lower operating costs and, in many cases, slightly less capacity per flight than has historically been operated. A combination of savings in operating costs and the potential for slightly higher yields continues to make flying across the pond increasingly attractive to airlines and in response new destinations are being added every year, says the analysis by OAG.
In terms of airport connections across the Atlantic, OAG says that this summer there will be approximately 445 different airport pairs operated across the Atlantic ranging from the largest such as New York JFK – London LHR, Paris CDG – New York JFK, Los Angeles LAX – London LHR. But there are also unique services like Copenhagen CPH-Miami MIA and Munich MUC-Miami MIA.
Compared to last summer, the 445 airport pairs operated in 2024 represents an increase of 16 new routes but remains below the peak summer 2017 when 488 airport pairs were operated.
OAG says that summer 2024 also marks a record year for LCCs flying across the Atlantic, with a 5.3 pc frequency share with just over 7,300 flights scheduled. Although in capacity terms their share of the market is just 4.6 pc by virtue of those airlines operating a lower than market average capacity per flight.
However, OAG adds, with such a small share of the market the ability for these airlines to disrupt the market is extremely limited, especially when access to major hub airports is factored into the mix. Network experimentation is a major part of LCCs’ operations. This year there are 47 airport pairs operated by the low-cost sector compared to 36 last year, with new routes such as Athens to New York JFK from Norse Atlantic Airways.
The long-term success of long-haul LCC services is always a question and their fragile market share makes them vulnerable to competitive pressures when market demand softens and the price of oil hardens. Aside from markets such as New York and perhaps Florida, year-round operations can be hard, resulting in increased operating costs from launching, closing and then relaunching services each year.
Jet Blue Airways has already started making network adjustments to its winter 2024-25 programme, while just launching seasonal services to Edinburgh in Scotland. This highlights just how much a carrier can change their network and indeed strategy in a few weeks of analysis.
While it may the busiest ever summer season on the Atlantic – and airlines will certainly be enjoying a combination of strong demand across both established and new routes being trialled – on a seasonal basis, the reality is that this is a very hard market to both break into and in which change occurs.
The legacy airlines and particularly the three major alliances dominate capacity through their joint venture agreements, some 80 pc of all flights will be operated by alliance partners, 5 pc by LCC’s and a smattering of non-aligned legacy carriers such as Icelandair, Condor and Air Transat who all adjust capacity from season to season as they compete in one of the toughest markets in the world.
