Travel boom helps European airlines defy economic gloom

After three years of shocks including the coronavirus pandemic and soaring fuel prices following Russia’s full-scale invasion of Ukraine, airline bosses are facing a more welcome puzzle: why is demand booming even as concerns mount over a deepening economic downturn? The UK’s easyJet on Tuesday became the latest carrier to predict a strong summer as it raised its earnings forecasts for a second time this year, boasting not only strong sales but also a willingness among passengers to pay high prices. European rivals have reported similar trends and many are already back in profit despite rising inflation and economic headwinds. Michael O’Leary, CE of Ryanair, has predicted that an expected rise in airfares of up to 15 per cent this summer will have no impact on bookings. Industry executives put the resilience in demand down to peoples’ desire to return to normality and resume travelling following pandemic restrictions. Johan Lundgren, CE of easyJet, said it had become increasingly clear this year that consumers were “prioritising” travel after border restrictions and Covid testing rules hampered tourism between 2020 and 2022. “We see strong momentum for bookings which is being driven by customers continuing to prioritise spending on their holidays,” he said. “Consumer research has said for some time that travel has risen in importance for consumer spending and this is clearly coming through in our bookings.” He pointed to recent research from the European Travel Commission, an industry association, which found that travel was the only discretionary expense that people were willing to maintain despite the economic conditions. A KPMG survey of UK consumers in December came to a similar conclusion, with travel moving to the top spot for non-essential spending over the next 12 months.<br/>