In February we published the blog post Europe Takes Off, which showed growth in European air traffic at 18 major airports. The second half of 2016 in particular showed impressive year-on-year growth right across the continent. We wondered whether it would continue, particularly into the busier northern summer months.
This article provides an update, with an additional five months of data coming from most airports. But first, let’s repeat some caveats related to individual airport results.
Paris-Charles De Gaulle and London Heathrow are capacity constrained. They’re not going to grow very fast given those constraints. Both posted impressive numbers considering. And you can ignore those huge growth numbers coming from Brussels. The terrorist attacks in late March 2016 closed the airport for some time, and badly suppressed traffic flows for much of last year. The bounce back is unsurprising.
Lastly, the good results from Frankfurt over the past few months are partly a mirage. The comparable second quarter in 2016 was a very weak one for a variety of reasons.
Leap year and Easter
Now for some general nuances around the new data from February to June. February 2017 was 28 days long, versus 29 days in 2016. We’ve reported the raw increase. You could add 3.5 percentage points to the numbers listed here to get a rough idea of underlying trend.
Also note that most of Western Europe celebrated Easter in April in 2017 and in March in 2016. That suppressed the March growth rates and boosted the April results this year.
With those nuances explained, here are the numbers. The trend is very much intact and, importantly, being maintained into the early summer months when most European airports experience peak flows.
If we take the average of those airports that have kept their reporting up to date—and exclude the outlier Brussels—we arrive at a flawed but far from useless metric. It suggests passenger growth across the continent averaging north of 6% for the past five months versus the same period last year. It’s closer to 7% if you adjust for the shorter February this year.
As we explained in Europe Takes Off, there’s a strong half century-plus correlation between commercial passenger growth and real GDP growth. Specifically, passenger growth runs at about 1.5-times real GDP growth. This holds over the long term but doesn’t necessarily mean much in the short term.
But the picture from this data hints that the European economy is thriving. The rate of growth is completely at odds with zero or negative interest rates and Europe’s massive quantitative easing program. One way or another, that conflict will get resolved soon enough.
2 thoughts on “European Air Traffic Still Ascending”
When you live in Perth these days now that the tide has gone out and taken our GST with it (double dilemma for us and what I would term tax slavery by Canberra) it is nice to hear that Europe has these underlying fundamentals pressing towards an upturned economy, we might at least see some more tourists coming through so we can hand Canberra even more of our money. Sarcasm aside, what does catch my eye is your note Gareth about it being at odds with the current flat interest rate regime. As this cannot continue unabated and it is quite a “gap” surely there must be opportunity there somewhere to take advantage of the elastic band snap that is imminent. I presume the bond market is one area but I have never been a follower of this market place. I will have to do some research. Any movement upwards in interest rates will of course strengthen the Euro as money floods in.
Problem is, as I think Gareth is suggesting by his last sentence, do we know whether interest rates will go up, or whether economic growth will come back down to earth?