Profitability across the airline industry is “on the horizon” in 2023 due to the easing of travel restrictions, strong pent-up demand for travel, and expanded personal savings. But airlines will have to guard themselves against a higher cost environment due to the rise in fuel prices, according to the global airlines’ body International Air Transport Association (IATA)’s industry forecast.
Worldwide losses for the industry are expected to reduce to $9.7 billion in 2022, an upgrade from the earlier forecast of $11.6 billion. The losses in 2020 stood at $137.7 billion and in 2021 at $42.1 billion.
"As the industry returns to more normal levels of production, and with high fuel costs likely to stay for a while, profitability will depend on continued cost control. And that encompasses the value chain. Our suppliers, including airports and air navigation service providers, need to be as focused on controlling costs as their customers to support the industry’s recovery,” said Willie Walsh, Director General, IATA, at its Annual General Meeting in Doha where CEOs of nearly 108 airlines have gathered.
Profitability around the world will be led by North America, which is expected to clock $8.8 billion profit in 2022. For Asia-Pacific airlines, recovery has been lagging due to strict and enduring travel restrictions, particularly in China, along with an uneven vaccine roll-out. Demand in 2022 in this region is expected to reach 73.7% of 2019 levels, and aircraft capacity will reach 81.5%. Losses are likely to narrow down to $8.9 billion.
Despite the slow recovery, the Asia-Pacific will be the fastest-growing region over the next two decades due to the favourable income growth and demographic factors and is expected to add around 2.5 billion additional passenger journeys per year by 2040, at an average annual rate of 4.5%.
(Writer is in Doha on the invitation of IATA)
Published - June 20, 2022 05:43 pm IST
