A recent International Air Transport Association (IATA) survey of top airline executives has shown that pressure on airline profitability diminished in the fourth quarter (Q4) of 2021.
IATA’s survey of airlines CFOs and heads of cargo, conducted in December 2021-January 2022 says the “improvement” is expected to continue in the year ahead.
However, the respondents were more cautious than in the previous survey due to the Omicron impact, soaring jet fuel prices and rising market competition that puts pressure on yields.
A majority of survey participants reported improving passenger and cargo volumes in Q4, 2021 versus Q4, 2020. They also expect this trend to continue in the future – notably on the passenger side of the business.
The survey results suggest no significant change in employment levels in Q4, 2021 versus the same period a year ago. On a positive note, 59% of respondents expect increased hiring in the next 12 months, thanks to recovering passenger operations.
Nearly 55% of the survey participants recorded higher input costs in Q4, 2021 (year-on-year), largely due to soaring jet fuel prices and staff shortages. The same share of respondents expects further input cost increase in the future.
Two thirds of airlines in the survey predict that passenger yields will stabilise at current levels or fall due to increased competition in the market. On the cargo side, 58% of respondents expect the yields to remain elevated or to rise further – down from 68% in the previous survey.
A significant majority of participants in the survey reported improved airline profitability over the past three months. 83% of respondents stated that their income increased (or losses diminished) compared with the same period a year ago – broadly unchanged from the October survey (85%).
The improvement remained driven by the gradual recovery in passenger traffic as travel restrictions were eased, and by strong cargo demand combined with elevated cargo yields. Those who reported a deterioration mentioned the increase in the jet fuel price and Covid-19 outbreaks in key markets.
Looking ahead, the survey suggests that the bottom-line figures will continue to improve, although the optimism is somewhat weaker compared with Q3, 2021.
The share of respondents who expect higher incomes fell from 74% in the October survey to 59% currently.
Meanwhile, the proportion of ‘no change’ answers grew from 24% to 34%. Carriers mentioned concerns about the Omicron impact on travel demand, higher jet fuel prices and pressure in yields due to increased competition. Taken together, the forward-looking weighted score ticked down from 85 to 76.
Almost all respondents (96%) reported an increase in passenger numbers during Q4 compared with the same period a year ago – an improvement from 86% in October and 81% in July.
The air travel recovery had been driven by the relaxation of cross-border travel restrictions in some key markets, including the reopening of transatlantic routes in early-November.
The backward-looking weighted score picked up, reaching the highest level since 2007.
A vast majority of survey participants (91%) expects that the recovery in passenger traffic will continue in the coming twelve months despite the Omicron outbreak. The remaining respondents assume no change in the current levels.
The further relaxation of travel restrictions and more efficient pandemic containment were cited as the key drivers behind the expected air travel rebound.
On the cargo side, 71% of respondents reported growing volumes in Q4, 2021 compared to Q4, 2020, while 21% indicated no change. Those stating improvement mentioned higher demand for air cargo during the peak season partly thanks to congested supply chains in the shipping industry.
Another supportive factor was also recovering belly-hold capacity with the restart of passenger operations. The backward-looking weighted score trended sideways at elevated levels.
The industry remains optimistic about cargo demand in the year ahead. Nearly two-thirds (64%) of survey respondents predicted further improvement in air cargo traffic while 29% expected no change from already very strong cargo positions.
IATA’s survey of airlines CFOs and heads of cargo, conducted in December 2021-January 2022 says the “improvement” is expected to continue in the year ahead.
However, the respondents were more cautious than in the previous survey due to the Omicron impact, soaring jet fuel prices and rising market competition that puts pressure on yields.
A majority of survey participants reported improving passenger and cargo volumes in Q4, 2021 versus Q4, 2020. They also expect this trend to continue in the future – notably on the passenger side of the business.
The survey results suggest no significant change in employment levels in Q4, 2021 versus the same period a year ago. On a positive note, 59% of respondents expect increased hiring in the next 12 months, thanks to recovering passenger operations.
Nearly 55% of the survey participants recorded higher input costs in Q4, 2021 (year-on-year), largely due to soaring jet fuel prices and staff shortages. The same share of respondents expects further input cost increase in the future.
Two thirds of airlines in the survey predict that passenger yields will stabilise at current levels or fall due to increased competition in the market. On the cargo side, 58% of respondents expect the yields to remain elevated or to rise further – down from 68% in the previous survey.
A significant majority of participants in the survey reported improved airline profitability over the past three months. 83% of respondents stated that their income increased (or losses diminished) compared with the same period a year ago – broadly unchanged from the October survey (85%).
The improvement remained driven by the gradual recovery in passenger traffic as travel restrictions were eased, and by strong cargo demand combined with elevated cargo yields. Those who reported a deterioration mentioned the increase in the jet fuel price and Covid-19 outbreaks in key markets.
Looking ahead, the survey suggests that the bottom-line figures will continue to improve, although the optimism is somewhat weaker compared with Q3, 2021.
The share of respondents who expect higher incomes fell from 74% in the October survey to 59% currently.
Meanwhile, the proportion of ‘no change’ answers grew from 24% to 34%. Carriers mentioned concerns about the Omicron impact on travel demand, higher jet fuel prices and pressure in yields due to increased competition. Taken together, the forward-looking weighted score ticked down from 85 to 76.
Almost all respondents (96%) reported an increase in passenger numbers during Q4 compared with the same period a year ago – an improvement from 86% in October and 81% in July.
The air travel recovery had been driven by the relaxation of cross-border travel restrictions in some key markets, including the reopening of transatlantic routes in early-November.
The backward-looking weighted score picked up, reaching the highest level since 2007.
A vast majority of survey participants (91%) expects that the recovery in passenger traffic will continue in the coming twelve months despite the Omicron outbreak. The remaining respondents assume no change in the current levels.
The further relaxation of travel restrictions and more efficient pandemic containment were cited as the key drivers behind the expected air travel rebound.
On the cargo side, 71% of respondents reported growing volumes in Q4, 2021 compared to Q4, 2020, while 21% indicated no change. Those stating improvement mentioned higher demand for air cargo during the peak season partly thanks to congested supply chains in the shipping industry.
Another supportive factor was also recovering belly-hold capacity with the restart of passenger operations. The backward-looking weighted score trended sideways at elevated levels.
The industry remains optimistic about cargo demand in the year ahead. Nearly two-thirds (64%) of survey respondents predicted further improvement in air cargo traffic while 29% expected no change from already very strong cargo positions.