The FDI angle:

• International flights are a major component of globalisation, enabling businesses to access overseas markets and explore foreign investment opportunities. 
• The locations of international flight capacity shows where airlines decide to invest, launch new routes and allocate more of their aircraft. 
• Why does it matter?  The rate of post-Covid recovery in a country's international flight capacity is an indicator for the state of its tourism industry, as well as its trade and investment flows. 

International flight capacity has rebounded worldwide since last year, but remains below pre-pandemic levels as China’s slower reopening holds back a faster recovery.

Between January and September 2023, almost 12 million international flights were scheduled globally. Although this was 26.8% higher than the number of flights available in the same months of 2022, it remains 8.6% lower than scheduled capacity in the corresponding period of 2019, according to OAG data.

Among the top 20 markets by international flight capacity in the first nine months of 2019, only three countries — Turkey, the UAE and Mexico — have seen capacity surpass pre-pandemic levels so far in 2023. Five other destinations have performed better than the sluggish (–8.6%) return of international flights worldwide — namely India, Spain, the US, Italy and France — while the remainder have performed worse than the global average.

John Grant, a partner at Midas Aviation, a data and consulting firm, tells fDi that the build back of flight capacity has been different around the world due to contrasting Covid-era travel restrictions. While most regional aviation markets, such as Europe, the Americas and Middle East are ahead or close to their 2019 levels, Asia is broadly still lagging behind in terms of connectivity.

“China is the final part of the jigsaw that is slowly reopening,” says Mr Grant, who does not expect China’s international capacity to return to its 2019 levels until at least May 2025.

There were fewer than 130,000 scheduled international flights to and from China in the first nine months of 2023, down by 64.4% on the same period of 2019, according to OAG. Hong Kong and Russia — which closed its airspace to most international airlines after its invasion of Ukraine — were the only other top 20 aviation markets to see declines of more than 50% over the same time frame.

While China is the world’s second-largest aviation market by total flight capacity, after the US, a slower reopening to inbound and outbound tourism, and intense ticket price competition has led international airlines to allocate capacity elsewhere.

Mr Grant says that non-Chinese carriers have been “cautious about their return” to China, due to having to “compete head to head” with Chinese airlines, which in normal times have 30% to 35% lower operating costs. 

The major aviation markets to have surpassed pre-pandemic levels — Turkey, the UAE and Mexico — were quick to reopen after the pandemic and are home to at least one of the world’s top 50 most connected international airports, OAG figures show.

Turkey’s international flight capacity has recovered since the government removed travel restrictions in June 2022, earlier than many other tourism destinations. The country has become a major international gateway due to the growth of local carrier Turkish Airlines and its expansion of Istanbul Airport, which the government claims will eventually become the world’s largest.

Despite a devastating earthquake in February, scheduled international flights have remained at elevated levels helped by strong leisure tourism demand.

Alongside the lifting of Covid restrictions in early 2022, the strong recovery in the UAE has been helped by Dubai-based Emirates, the biggest carrier in the Middle East. The airline said in March 2023 that it has boosted its capacity by 31% since the start of the financial year due to strong travel demand.

Meanwhile, Mexico was one of a few countries in the world to have almost no travel-related restrictions during the pandemic. While Mexico’s government is planning to cap flights at Mexico City International Airport to help diversify its airspace, strong tourism demand and growth of other airports has led fast growing carriers like VivaAerobus and Volaris to add significant new capacity.

Overall airline industry revenue passenger-kilometres — a measure of total air traffic — rose by 28.4% in the peak holiday month of August 2023, compared to a year earlier, according to the International Air Transport Association (IATA). Global air traffic was at 95.7% of pre-Covid levels in August 2023. Global passenger numbers are expected to surpass pre-pandemic levels in 2024, according to IATA, which also expects global demand for air travel to double by 2040.

“Heading into the last quarter of the year, the airline industry is nearly fully recovered to 2019 levels of demand,” Willie Walsh, IATA’s director general, said in a statement. “The focus, however, has not been on getting back to a specific number of passengers or flights, but rather on meeting the demand by businesses and individuals for connectivity that was artificially suppressed for more than two years,” he added.