European airlines look back on a turbulent 2010

Ash, snow and strikes combine to hold back market recovery
The Association of European Airlines, which represents Europe's most important network carriers, has revealed a preliminary traffic estimate for 2010 of 335 million passengers boarded by its members, ten million more than in 2009. Using the industry standard measure of passenger-kilometres, this represented a 2.5% increase over the previous year.
The figures are based on monthly returns of AEA's members' traffic up to November, and weekly reports for the last month of the year. The data is available from the Research & Statistics section of the AEA website (click on individual months in the Monthly Monitor table).

The figures were of course severely distorted by the effects of external shocks, most notably the airspace closures associated with the Icelandic volcanic eruptions in April and May, but also the unprecedented disruptions at airports caused by the snowfalls of late November and December. The year was also notable for the frequency and intensity of industrial action which affected flight operations, very often as a response to national austerity measures linked with the recession and its aftershocks, particularly in the Eurozone.

Figures produced by Eurocontrol estimate that 160,000 flights within Europe were cancelled during 2010. 100,000 of these were attributed to the volcanic eruption, but the remaining 60,000 represented an 150% increase over the previous year's level of cancellations.
With so many disturbances affecting traffic trends, it is difficult to obtain a clear picture of the state of the market, but there was sufficient evidence from individual monthly figures to suggest an underlying growth trend, as the year progressed, in the range 5%-6% above the previous year's depressed level.
It is clear that during the first part of the year - regardless of the ash cloud - the traffic losses of 2009 were not being recovered, and while genuine growth was re-established in the second half, the recovery remained extremely weak. The resilience shown by the market in bouncing back after 9/11 and again after Gulf War 2 and SARS has so far not been in evidence.

Said AEA Secretary General Ulrich Schulte-Strathaus: "While the recession of 2008/9 affected airlines and their markets around the world, the recovery process is very different between one region and another, and particularly in Europe we are lagging behind the rest of the world. This alone places European airlines at a competitive disadvantage vis-à-vis their global rivals, and it is vitally important that the political and operating environment within which we do business does not burden us further".
AEA anticipates that it will be able to announce a very small operating profit for the totally of its members, for 2010. But it acknowledges that the figure reflects an average spread ranging from impressive turnarounds for individual carriers to significant losses for others. "Further consolidation appears inevitable under the prevailing circumstances", said the AEA Secretary General. "But all airlines, whether ailing or recovering, are united in their view that the European aviation value chain must become more efficient, if the European aviation sector is to become competitive internationally".
It was necessary, he said, to address both systematic weaknesses - such as the slow progress towards an effective Air Traffic Control system - and the vulnerabilities exposed by the events which disrupted business in 2010. Referring to the recent snow chaos, he said that the world is amazed and customers rightly upset that airlines cannot fly as scheduled in Europe because it snows in winter. "The regulators should take a strong grip on infrastructure, and ensure that weak links among service providers are liable for the damage incurred to airlines and their customers", said Ulrich Schulte-Strathaus.

Data tables showing monthly and year-to date figures by region, and by AEA member airline, can be viewed here.
David Henderson


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