European and U.S. airlines revenue gains expected in Q3 are at risk as a resurgence of COVID 19 deters travelers and has some airlines reducing services, Bloomberg Intelligence analysts put out in a research note ahead of the UK government imposing a sudden quarantine requirement on UK travellers returning from Spain.
‘A recovery in air travel remains highly susceptible to the risk of a coronavirus resurgence as demonstrated last week when load factors likely fell below 40%, with the number of passengers decreasing 4.5% from the prior week. Revenue gains at U.S. airlines in 3Q are exposed, while Europe capacity growth and parked-fleet improvements are decelerating,’ BI’s aviation analysts said in a note.
According to BI load factors at US airlines fell due to fewer travelers last week, despite mostly stable capacity as COVID 19 surges in southern states. It said that Europe capacity may rise 5% this week, which was less than half the gains expected a week earlier, however, even this prediction came ahead of the UK government’s quarantine measures.
The UK government imposed a 14-day quarantine on all arrivals from Spain on Sunday, following a spike in infections in the southern European country. The move represents a major challenge for Spain’s tourism industry as about 18 million Britons travelled to Spain in 2019 - almost 25% of total visitors.