European airline results make for ‘depressing reading’, says Air Astana boss
The recent performance of European airline makes for “depressing reading,” the boss of Air Astana has said, in the latest signal the post-Covid boom in Western aviation may be slowing.
Results in Europe and the US have been “pretty grim”, Peter Foster, who led the dual-listed Kazakh flag carrier through a much-anticipated London IPO earlier this year, told City PM in an interview.
“It makes for depressing reading for those airlines and investors and indeed, our European performance absolutely reflects that, Europe for us in the first half is down by 8 per cent.”
Ryanair struck panic among airline investors last month when it forecasted “materially lower” ticket fares over the summer and revealed an unexpectedly sharp dip in profit. The news sparked a sell-off in a number of Europe’s biggest listed airlines. A week later, Wizz Air also reported plunging profit as it grappled with engine issues in its supply chain.
It has raised questions over the longevity of a two-year surge in the aviation sector, driven by pent-up demand for travel after years of pandemic-era lockdowns.
It also comes at a time when European aviation executives have warned over growing competition from airlines and airports in the likes of India and China in the Far East. In an interview with City PM Istanbul Airport’s chief executive said aviation’s “centre of gravity” was shifting eastwards and struck a downbeat tone over the future of European airports including Heathrow and Amsterdam’s Schipol.
Air Astana on Monday reported record passenger half-year passenger numbers, driven by unexpectedly high demand from China and South Korea.
“Europe is a relatively small part of our network. A much bigger part is Southeast Asia, North Asia, Korea, China, and you know, the Gulf in the Middle East,” Foster said.
“They are all showing great growth, you know, this region domestic North Asia, the Middle East, India, and China…. this year we’ve done very well out of China so far.”
He added: “You know, there has been this strong presence of Chinese tourists and Chinese investment in Central Asia and particularly in Kazakhstan. So it’s, it’s strong and it’s getting stronger. So we are putting more capacity onto those routes.”
When asked why Air Astana’s European segment declined, Foster noted the extreme difficulty for travellers to acquire Schengen Visas. “Our routes to and from Greece have been very badly affected by that,” he said.
In the UK, the general election left things “a little bit flat”, while Amsterdam, traditionally a hub for the airline’s oil traffic from Western Kazakhstan, has also seen significantly fewer rotations than there used to be.