Istanbul: Airline industry is en route to a profitable, safe, efficient, and sustainable future, the International Air Transport Association (IATA) Director General Willie Walsh said and noted that with $803bn of revenues, airline net profits are expected to reach $9.8bn in net profit this year.
The estimated net profit this year is more than double the previous forecast of $4.7bn in December 2022. In his report to the 79th IATA Annual General Meeting here Monday, Walsh said global air passenger traffic is currently more than 90% of 2019 levels.
Some 4.35bn people are expected to travel in 2023, which is closing in on the 4.54bn who flew in 2019. Cargo volumes are expected to be 57.8mn tonnes, which has slipped below the 61.5mn tonnes carried in 2019 with a sharp slowing of international trade volumes.
Total revenues are expected to grow 9.7% year over year to $803bn. This is the first time that industry revenues will top the $800bn mark since 2019 ($838bn). Expense growth is expected to be contained to an 8.1% annual increase.
“Airports are busier, hotel occupancy is rising, local economies are reviving, and the airline industry has moved into profitability. The pandemic years are behind us, and borders are open as normal. Despite economic uncertainties, people are flying to reconnect, explore, and do business.
Walsh said: “Airline financial performance in 2023 is beating expectations. Stronger profitability is supported by several positive developments. China lifted Covid-19 restrictions earlier in the year than anticipated. Cargo revenues remain above pre-pandemic levels even though volumes have not. And, on the cost side, there is some relief. Jet fuel prices, although still high, have moderated over the first half of the year
“Margins are, however, wafer thin. With $803bn of revenues, airlines will share $9.8bn in net profit this year. Put another way, airlines will make, on average, $2.25 per passenger. So, the value retained by airlines for the average plane trip won’t even buy a subway ticket in New York City.
“Clearly that level of profitability is not sustainable. But considering we lost $76 per passenger in 2020, the velocity of the recovery is strong,” Walsh noted.
The IATA chief, however, insisted “challenges remain.” He said: “Inflation continues, cost pressure is acute, and in some areas, labor is in short supply. Unfortunately, many of those we do business with are adding to these pressures.”
On safety, Walsh said: “We can also be impressed by the industry’s safety record. This year marks 20 years of the IATA Operational Safety Audit (IOSA). In September 2003, Qatar Airways was the first to join the IOSA registry. Today, over 400 airlines are on the registry. It is the global standard for managing operational safety.
“More importantly, it is clear that IOSA helps to improve safety. In 2022, IOSA registered carriers outperformed those not on the registry by a factor of four. It is never ‘job done’ on safety. So, we are marking two decades of success by making IOSA even more effective with a transition to a risk-based approach.
“Of course, IOSA is not the only global standard improving safety. We prevent future accidents by learning from accident reports. But, of the 214 accidents in the last five years, only 96 final accident reports are available. This is an inexcusable violation of the Chicago Convention and a disservice to the safety of our passengers and crew. Governments and their agencies must improve.”
As an industry connecting people and goods across jurisdictions, global standards are at the core of airlines’ success—starting with safety and permeating everything they do.
For example, Walsh noted: “Consumers the world over appreciate the ability to purchase air travel in a single currency for any destination in absolute confidence. That’s achieved with the global standard processes of the IATA Financial Settlement Systems. With half a century of experience and global scale, they are cost effective, safe and reliable. And we are constantly evolving them to deliver the value you expect.”
IATA Director General Willie Walsh speaks during IATA annual meeting in Istanbul, Turkey, Monday. REUTERS/Dilara Senkaya.