Global airline industry can possibly claw its way back to profit in 2023 as the continued easing of Covid-19-related restrictions by governments is releasing demand pent up over the last two years when countries had shut their borders.
The head of the world’s biggest airline trade body – IATA recently said in Doha the recovery in passenger traffic was accelerating and that on average, the industry could now return to pre-pandemic figures in 2023, a year earlier than its previous forecast.
International Air Transport Association Director General Willie Walsh noted overall passenger traffic was picking up faster than expected despite the war in Ukraine and continued restrictions in major aviation market China.
“We are seeing very strong bookings. Certainly all the airline CEOs that I am talking to are seeing not just good demand for year-end travel but they continue to see demand as they looked through the year,” he said.
“Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty.
“Losses will be cut to $9.7bn this year and profitability is on the horizon for 2023. It is a time for optimism, even if there are still challenges on costs, particularly fuel, and some lingering restrictions in a few key markets,” Walsh noted.
Data reveal revenues are rising as Covid-19 restrictions ease and people return to travel. The challenge for 2022 is to keep costs under control.
Industry revenues are expected to reach $782bn (up 54.5% on 2021). Flights operated in 2022 are expected to total 33.8mn, which is 86.9% of 2019 levels (38.9mn flights).
Passenger revenues are expected to account for $498bn of industry revenues, more than double the $239bn generated in 2021. Scheduled passenger numbers are expected to reach 3.8bn, with revenue passenger kilometres (RPKs) growing 97.6% compared with 2021, reaching 82.4% of 2019 traffic.
As pent-up demand is released with the easing of travel restrictions, yields are expected to rise 5.6%. That follows a yield evolution of -9.1% in 2020 and +3.8% in 2021.
Cargo revenues are expected to account for $191bn of industry revenues. That is down slightly from the $204bn recorded in 2021, but nearly double the $100bn achieved in 2019.
Overall, the industry is expected to carry over 68mn tonnes of cargo in 2022, which is a record high.
Buoyed up by this year’s re-opening of international routes, long-haul flights in particular, net losses in Middle East’s airline industry are expected to narrow to $1.9bn in 2022, from a $4.7bn loss in 2021.
In the Middle East region, the demand calculated on revenue passenger kilometres (RPKs) is expected to reach 79.1% of pre-crisis (2019) levels, and capacity 80.5%, IATA’s latest industry outlook released in Doha had shown.
GCC carriers led by Qatar Airways are expected to be the key drivers of the air travel rebound in the region.
Certainly, profitability is on the horizon for 2023. It is a time for optimism, even if there are still challenges on costs, particularly fuel, and some lingering restrictions in a few key markets.
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