Regional Briefing - Europe - January 2022

State of the Region:

Europe

IATA Economics

January 2022

Contact: [e-mail]

1

Economics

GDP growth, exchange rates, oil & jet fuel price

• The trade-weighted US dollar (USD) index rose by 0.7% in December versus November on the back of recovering US economy and expectations about US Federal Reserve interest rate hikes in 2022. Among the key region currencies, the GBP gained 2.3% in December.
• The TRY was the weakest currency in the region in 2021 as a whole. Falling interest rates that coincided with soaring inflation helped to fuel the current currency crisis in the country.
• Jet fuel and Brent crude oil prices fell sharply in early-December due to concerns about the impact of Omicron disruptions on global fuel demand. However, despite the year-end weakness, the average 2021 Brent crude oil and jet fuel price was 63% and 68% respectively higher than in 2020. Moreover, the prices started to soar again in recent weeks amid optimism that the Omicron impact will be short-lived.

GDP growth

% change on a year ago	2020	Q1 2021	Q2 2021	Q3 2021
Germany	-4.9	-3.0	10.0	2.6
Russia	-3.0	-0.7	10.5	4.3
France	-8.0	1.5	18.8	3.3
UK	-9.4	-5.1	24.2	6.8
Italy	-9.0	-0.6	17.1	3.9
Spain		-10.8	-4.3	17.7	3.4
		1.8	7.4	22.0	7.4
Turkey
Israel	-2.1	0.8	14.7	6.2
Euro zone	-6.5	-1.1	14.4	3.9
Eastern Europe	-3.0	-0.4	9.8	5.0
		-3.5	2.9	11.6	4.7
World*

Exchange rates

end of period, # per	%YTD 2021	Oct-21Nov-21Dec-21
US$ broad index	3.5%	114.1	115.0	115.8
European euro (EUR)	-8.6%	0.9	0.9	0.9
Russian ruble (RUB)	-1.4%	71.0	74.4	75.0
British pound (GBP)	-0.9%	0.7	0.8	0.7
Turkish lira (TRY)	-77.5%	9.6	13.2	13.1
Israeli shekel (ILS)	3.1%	3.2	3.2	3.1

Oil and fuel price

US$/barrel (period ave.)	2021	Oct-21	Nov-21	Dec-21
Crude oil (Brent)	70.9	83.9	80.9	74.7
Jet fuel	77.7	95.6	91.8	87.1

2 Source: Refinitiv Eikon, S&P Platts

Purchasing Managers' Index

• Based on the latest PMI results, the rate expansion in the European manufacturing sector was broadly unchanged in December versus November (the ratio of positive versus negative survey responses was similar in the two months). The region continues to grapple with the supply chain issues and economic uncertainty related to the Omicron spread. On a positive note, answers from the PMI survey suggest that the supply chain crisis has been slowly unwinding in the Eurozone.

Purchasing Managers' Index - Manufacturing

50=no change, seasonally adjusted

70

65

60

55

50

45

40

35

30

2015	2016		2017	2018		2019	2020	2021	2022
			UK				Euro zone				Russia

3 Source: Markit

Passenger market

• Air-travelrecovery continued in November ahead of the Omicron outbreak, but the traffic improvement was smaller than in the previous months. The industry-wide revenue passenger-kilometres (RPKs) fell by 47.0% versus November 2019, compared with a 48.9% contraction in October.
• European airlines flew 39.4% fewer RPKs in November 2021 versus November 2019. Region's international traffic has been the most resilient in the industry thanks to high demand on intra-European routes and more recently also the reopening of the US-Europe corridor. The rate of RPK expansion in the Russian domestic market slowed to 17.5% in November, from 27% in October (both versus 2019). This can be attributed to easing domestic tourism demand with the start of the winter season and the effects of a strong COVID wave.

	Growth in passenger volumes (RPKs) , by region
Revenue passenger-kilometres (RPKs)	RPKs, % change vs. Nov 2019

% ch vs.the same period in 2019	2020	Sep-21	Oct-21	Nov-21
Region (registration basis)
Europe	-69.5	-49.9	-44.2	-39.4
World	-65.8	-53.2	-48.9	-47.0
Routes (segment basis)
Russia domestic	-21.6	32.5	27.0	17.5
Within Europe	-70.7	-44.0	-35.5	-33.4
Europe - North America	-80.5	-65.2	-63.9	-47.2
Europe - Asia	-79.0	-86.8	-86.3	-83.4
Europe - Middle East	-72.8	-64.9	-54.8	-48.3
Europe - Africa	-68.5	-49.2	-40.7	-36.8
	-71.9	-70.4	-58.6	-51.9
Europe - South America

Asia		Middle	Latin	North
Pacific	Africa	East	Europe America America Industry
				-18.8%
			-27.5%
			-39.4%	-47.0%
	-55.1%	-52.6%
-69.8%

4 Source: IATA Monthly Statistics

Air cargo market

• Growth in industry-wide cargo tonne-kilometres (CTKs) decelerated in November due to supply chain issues. CTKs were 3.7% above their November 2019 levels, after rising 8.2% in October versus October 2019.
• Carries based in Europe recorded a marginal 0.3% CTK increase between November 2021 and 2019, after a robust 7.4% growth in October. Same as the rest of the industry, European cargo traffic was negatively impacted by supply chain congestion and localized capacity constraints.

Cargo tonne-kilometres (CTKs)

% ch vs.the same period in 2019	2020	Sep-21	Oct-21	Nov-21
Region (registration basis)
Europe	-15.7	4.0	7.4	0.3
World	-9.9	7.6	8.2	3.7
Routes (segment basis)
Europe - Asia	-10.4	-0.2	6.5	2.0
Europe - North America	-17.9	6.7	9.5	11.6
Europe - Middle East	-17.3	1.1	0.2	-1.5
Europe - Africa	-20.3	-11.0	-9.6	-6.8
Europe - South America	-23.6	-4.7	-3.3	-10.2
Within Europe	-23.7	-10.9	-13.4	-16.9

Growth in cargo volumes (CTKs), by region

CTKs, % change vs. Nov 2019

					13.3%
		0.3%	1.1%	3.4%		3.7%
	-0.1%
-12.8%
Latin	Africa	Europe	Asia	Middle	North	Industry
America			Pacific	East	America

5 Source: IATA Monthly Statistics