Limited understanding of oil dynamics will increase the margin of error. The rationale behind hedging fuel now is understandable, but influenced by recency bias, projecting a similar change in oil price moving forward. Wizz Air) recently reversed its no-hedging policy to protect from further future oil price increases. However, with high oil prices and its rate of change, some airlines (e.g. Unlike Qantas, many other airlines have reduced or abandoned fuel hedging policies after huge losses in 2008. The Atlanta Federal Reserve Bank estimates a substantially lower GDP compared to consensus, for the first quarter of 2022 (almost 2% less on 6 th March 2022). At the same time, other airlines started cutting down flight plans or trimming flights as airline profit hopes start to fade. That pent-up demand may look correct looking from the lows in 2020 and likely vary per region, but in the US, Transportation Security Administration (TSA) data today show that travel numbers for 2022 only average 83% of what they used to be in 2019 over the same period.Ĭonsequently, refinery intakes have been less than their 5-year average for quite some time now, which may be seen as an indication that they do not agree with the pent-up demand narrative.
Is it really all sunshine and lollipops for aviation? Unraveling the narrative Qantas reported seeing a very strong leisure demand (reporting March 8 th 2022), whilst being able to tolerate ticket-price hikes to manage recent high oil prices. Mortgages at 90% are very limited, with HSBC announcing on Thursday that it was temporarily pulling out of the market, leaving just Nationwide among the major lenders offering low-deposit deals.įirst-time buyers are also facing competition from investors and downsizers, who are also beneficiaries of the stamp duty holiday.With Covid changed into an endemic and economies opening up, the narrative of pent-up demand is prolific. The number of first-time buyers fell in the first half of the year, taking it to a seven-year low of 116,843.Īlthough some of the fall was in line with the rest of the market, as lockdown led to purchases being put on hold, first-time buyers face big hurdles. In London, the average price had also doubled over the same period, to £463,536, and elsewhere in the south-east it was up 73% to £303,838. The bank said the typical price paid by someone entering the market had risen by 69% over the past decade, from £142,473 to £241,025. Separate research by mortgage lender Halifax reveals the difficulties faced by first-time buyers, particularly in London and the south-east. “Sellers do need to move more quickly than before because although we’re in uncharted territory with record activity it’s still likely that demand will start to soften as it always does towards the end of the year.” Shipside said sellers of three-bedroom detached homes were in the “sweet spot” and that bigger “top of the ladder” houses were also proving popular, although this could be because families who were usually away on holiday had brought their search forward. Miles Shipside of Rightmove said: “Not every home sells, but those that are well presented by agents, are on at the right price, or are just lucky enough to be in demand are among a record number of homes selling within the first week of coming to market since we started tracking this data 10 years ago.” The site said the slowest market was in London, although even in the capital homes were selling more quickly than in the summer of 2019. One in five of these properties took less than a week to go under offer, although in Scotland the figure rose to a third. Sellers of three-bedroom semi-detached homes had the best chance of selling quickly, Rightmove said, echoing reports from estate agents that buyers are looking for more space after lockdown.
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