Trends in Air Travel: What’s in store for the industry?

Despite passenger travel coming to a standstill for much of the pandemic, a recent report by the International Air Transport Association (IATA) has shown that air travel demand is on the rise, with traffic from February this year up 55.5% compared to last year. Global air traffic has now recovered 84.9% since the start of the pandemic and this is great news for the industry, which is gearing up for a busy summer followed by a full recovery by 2024.??

While the report is encouraging, questions remain around how the pandemic has changed people's attitudes towards travel. Specifically, have passengers' preferences for short-haul vs. long-haul flights changed and where does cargo come into the equation here.??

During the pandemic, long-haul flight routes and orders for wide-body planes were cut, leading many existing wide-bodies to be converted for the transportation of cargo. Airlines also invested millions in new freighter aircrafts to capitalize on the stay-at-home induced e-commerce boom and compensate for the lack of travel. While cargo demand remains relatively high, it has certainly contracted from its pandemic highs. According to IATA, cargo demand in February was down 7.5% compared to the same period in 2022. As cargo demand has waned, passenger demand on the other hand has boomed.??

One way to glean a snapshot of trends in passenger demand is to look at Boeing and Airbus’ production targets of narrow-body vs. wide-body planes. Before the pandemic, both Airbus and Boeing were encouraging airlines to buy their more profitable wide-body jets. During the pandemic, both producers hastily ceased taking orders for wide-body jets as long-haul travel came to a screeching halt virtually overnight. In 2021, as we recovered from the pandemic, orders for single-aisle planes boomed, as short-haul travel resumed not only more quickly, but also in greater quantity.??

More recently Airbus and Boeing both committed to increasing their production of both narrow and wide-body planes. Benjamin Katz, from The Wall Street Journal, reported in February that wide-body demand has returned, with the news that Airbus had increased its production target of its A350 from six to nine a month – one short of pre-pandemic levels. Recently, Airbus signed several large deals for wide-bodies with airlines such as Air India and Qatar Airways. Likewise, it raised its production goal of narrow-body jets to 75 per month by 2026 - up from 40 a month in the beginning of 2020.?

Overall, it is difficult to say whether the pandemic has fundamentally changed passengers' travel behavior and the production waves by Airbus and Boeing do not paint a clear picture of demand swinging in a particular direction. My personal bet is that short-haul travel will remain the winner for the foreseeable future.??

Here at Menzies, we’ve incorporated the predicted success of short-haul travel into our broader global strategy. Through the expansion of our partnership with the Qantas Group across ten airports in Australia and New Zealand, we’ve been able to diversify our ground services business from one that was based predominantly on long-haul flights – and therefore wide-bodies – to higher volume, short haul flights flown by narrow-body jets.