Global ratings agency forecasts tough year ahead for Europe’s airports

Passenger traffic and revenue at Europe’s airports this year is likely to be around 30% to 50% down on 2019 levels, according to a new report by S&P Global Ratings.

The global ratings agency’s forecast is based the new travel restrictions implemented to curb the spread of fast-spreading COVID-19 variants, which it claims have “dealt a further blow to Europe’s aviation industry”.

S&P states that more-severe lockdown measures have eroded consumer confidence, putting its previous air traffic assumptions of a stronger summer recovery in Europe at risk.

As a result, it is currently forecasting that a best case scenario would be a 50% recovery in traffic and passengers on 2019’s record levels.

The report notes that governments across Europe are finding it more difficult to control the COVID-19 pandemic, as numerous new virus variants have emerged which appear more transmissible and have led to concerns over vaccine efficacy.

It states: “European air passenger confidence and demand have understandably faltered, depressing the rebound in European air traffic and likely delaying a more meaningful recovery to after the crucial summer season.

“This will fuel further cash burn and debt accumulation for European airlines and airports and could cause some downgrades.

“Although vaccine rollouts offer an encouraging path back to more normal levels of social and economic activity, implementation is proving more complex than expected. Most EU countries got off to a slow start and the new variants have led to concerns over vaccine efficacy.

“Under our base-case scenario, we now expect the recovery of European air traffic to be weaker, and slower, in 2021 than we previously forecast.

“Although we see evidence of a huge amount of pent up demand for travel, a more meaningful recovery could be delayed to the fourth quarter.

“If the EU can accelerate vaccine production and rollouts, we think it could achieve widespread immunisation by the end of the third quarter, enabling air passenger traffic to recover more meaningfully later in 2021.

“Consequently, we assume 2021 European air passenger traffic will recover only to 30%-50% of 2019 levels”.