Heading into the last few weeks of the year, the global airline industry seems to be nearly fully recovered to 2019 levels of demand.

Gulf Times

The demand for air travel met well in August, latest update from International Air Transport Association (IATA) indicate, which is a huge sigh of relief for an industry that got totally decimated by the Covid-19 pandemic, resulting in huge losses in terms of revenue, passengers and jobs.
“For the year to date, international traffic has increased by 50% versus last year and ticket sales data show international bookings strengthening for travel in the last part of the year. The global airline industry expects to fly 4.4bn travellers this year,” said Willie Walsh, IATA’s Director General.
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 noted.
Total traffic in August (measured in revenue passenger kilometres or RPKs) rose 28.4% compared to August 2022, according IATA.
Globally, traffic is now at 95.7% of pre-Covid levels, the association said in its report released recently.
In August, industry-wide revenue passenger kilometres grew 28.4% year-on-year and reached 95.7% of August 2019 levels.
In seasonally adjusted terms, passenger traffic increased 1% month-on-month, indicating a slowing but still positive trend globally.
Seat capacity, measured in available seat-kilometres (ASKs), rose 24.9% year-on-year and was only 3.1% under 2019 levels. Airlines in all regions have achieved growth in traffic and passenger load factors (PLFs), compared to the same month in 2022.
Across the whole industry, PLFs have trended near those of 2019, an indication of high demand for air travel and good financial performance for airlines.
African and Middle Eastern carriers saw 26.1% and 27.3% year-on-year growth in international RPKs in August, respectively. For both regions, traffic levels are still approaching full recovery, maintaining their upward trends observed since earlier this year.
Total domestic RPKs grew 9.2% over 2019 numbers and 25.4% over 2022 levels, maintaining the improvement trend observed in recent months.
On the hand, the recovery in international RPKs experienced a decrease compared to July, now standing 11.5% below August 2019 levels.
While recovery trends in domestic and international traffic have been diverging since May this year, international RPKs have maintained their growth, albeit at a slower pace than domestic traffic and relative to the strong performance of international traffic in 2019.
Two key airline markets- China and India have seen substantial growth in domestic RPKs over recent months.
In China, traffic almost doubled compared to last year, with 93.6% annual growth in August, albeit from a higher base. Domestic demand in the country remained 20.8% above pre-pandemic numbers while ASKs were 33.9% higher than August 2019 levels, resulting in a lower monthly PLF.
In India, domestic traffic stood above pre-pandemic levels for the 7th consecutive month. RPKs increased 6.7% over 2019 levels and 23.2% year-on-year. Based on the most recent data and developments for the country’s airlines, the Indian domestic market indicates that it has resumed its pre-pandemic growth trend.
International RPKs in the Asia Pacific region surged 98.5% year-on-year, almost doubling when compared to the previous year but still down 24.5% compared to 2019 numbers. Nonetheless, the region’s PLF was 5.5 ppts higher than in August 2022 (1.4 ppts above August 2019 levels), revealing the high demand for travel in the region.
Despite sustaining a positive trend in levels, the recovery of industry-wide international RPKs has been regressing since May 2023. While most regions have seen continuous recovery, Europe’s momentum has been losing steam over the most recent months. In addition, August 2023 saw lower passenger traffic numbers than July, an unusual pattern in contrast to the historical seasonal trends. The region also faces a wider range of capacity constraints, which could further hinder traffic recovery.
International RPKs performed by European carriers were 9.8% lower in August compared to pre-Covid levels, while the load factor remained 2.3 ppts below.
At the IATA Annual General Meeting in Istanbul in June, IATA projected that with $803bn of revenues, airlines will share $9.8bn in net profit this year, although industry experts say margins are wafer thin.
That said, the pandemic years are behind us, and borders are open as normal. Despite economic uncertainties, people are flying to reconnect, explore, and do business.
Airports are busier, hotel occupancy is rising, local economies are reviving, and the airline industry has moved into profitability.
Clearly, airlines are en route to a profitable, safe, efficient, and sustainable future.
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