European airlines and hotel chains are seeing bookings recover to levels barely seen since the start of the COVID-19 pandemic, led by demand for shorter trips, although long-distance travel remains on the ropes.
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The pandemic led to international travel virtually shutting down as governments around the world curbed entry. However, the easing of curbs and bottled-up travel demand have led to an abrupt upswing in short- and medium-haul trips.
“There is a lot of pent-up demand. People want to see their families and travel again,” said Phil Seymour, president of IBA Group, a UK-based consultancy and aircraft valuation firm.
That echoes soaring domestic demand in the United States.
“The big overlay is that air travel demand is back and it is back in a massive way,” Sean Egan, chief executive of the Egan-Jones Ratings Company, told the Airfinance Journal conference.
Challenges remain in the form of rising costs and staff shortages causing flights to be cancelled. Some airlines have promised more than they can deliver this summer, delegates warned. Even so, airlines expect a return to profitability.
Aer Lingus-owner IAG ICAG.L expects to be profitable from the second quarter onwards and for the year as a whole, it has said. That’s despite having to cut capacity in the first quarter to avoid disruptions.
“Premium leisure continues to be the strongest performing segment and business travel is at its highest level since the start of the pandemic,” said IAG chief executive Luis Gallego.
IAG, which also owns British Airways Iberia, and Vueling, said that the easing of UK travel restrictions especially had improved demand. It saw “no noticeable impact” from the Ukraine conflict.
IAG forecasts passenger capacity to be around 80% of 2019 levels in the second quarter, rising to 90% by the fourth.
Flights between Europe and North America will be close to full capacity by the third quarter, it said, though analysts say that…