European airline capacity set to rise in first half of 2024

European airlines' capacity is set to rise in every market in the first half of 2024, according to a Bloomberg Intelligence report. Transatlantic capacity is leading the way with a rise of 8.4%, surpassing 2019's fourth quarter capacity. US and European joint ventures have prevented competition, thus putting fares under less pressure. The report also found that intra-Europe competition could intensify, posing the greatest risk in particular to budget carriers like Ryanair and Wizz Air. ""European airlines may see increasing competition in all markets in H1 as capacity returns at strong growth rates, which will likely pressure fares and profits,"" said Bloomberg Intelligence senior industry analyst (aerospace) George Ferguson. ""Intra-Europe and North American routes are critical for the carriers and could see 7-10% more seats than last year."" North American routes have a significant impact on the three largest full-service carrier groups, Air France-KLM, IAG and Lufthansa, although market shares have largely returned to 2019 levels. Ferguson added: ""Asia-Pacific increases are higher, though capacity could remain below 2019 levels, stemming the slide in yields."" The intra-Europe fares may be most pressured by capacity increases in the first half of 2024 as carriers add back 7.2 percentage points of seat capacity since the second quarter 2023, led by Lufthansa (11.6 points) and Air France (8.4 points). Larger aircraft are used to combat the higher wages, especially for pilots, with the demand for seats growing faster than flights. Ferguson said: ""This increase in aircraft size likely intensifies competition as route diversification dwindles, since larger aircraft can't serve smaller markets without overly depressing fares.""