The International Air Transport Association (IATA) has revised its 2022 industry profit forecast upwards to $9.8bn from $4.7bn after many groups reported signs of recovery. The trade body said carriers benefited from a rise in demand for passenger and cargo transport, at a time when Boeing and Airbus faced manufacturing difficulties, and added that revenues would reach $803bn in 2023, up 9% from 2022. Chief executive Willie Walsh said the airline’s “financial performance for the year exceeded expectations”. However, his statement also revealed that freight volumes were below pre-pandemic levels, while jet fuel still remains expensive.
Additional Piece:
Airline Industry on the Upswing-As Much Has Changed
The airline industry has come out of the health crisis bruised, but not defeated. An overwhelming decline in passenger traffic resulted from travel restrictions and fear of the virus, this period became a time for airlines to pause and review their services. As things slowly start to return to normal, there are some developments that have occurred within the aviation space.
Travel Trends:
With the growth of low-cost airlines together with the relaxed regulations like cheaper visas, easier access to flights, and better routes, the demand for air travel to various destinations for both business and leisure may increase. There has been a growing trend in eco-travel, coupled with the growth of young, more environmentally-conscious travellers willing to pay more for eco-friendly airlines. These developments indicate that the trends which developed during the pandemic may be here to stay.
More Open Skies:
There has been an increase in the number of airlines with the ongoing open skies agreements around the globe. Open Skies is a biliteral agreement between two countries that lifts restrictions on flights, such as the number of carriers allowed, the frequency of flights offered, and the routes that can be served. This, in turn, allows for more airlines to gain access to international destinations, resulting in more competition, increased travel, and affordable fares.
Airlines Focused on Efficiency:
Airlines are keen on finding means to increase efficiency and reduce costs. One way to achieve this is through modernizing their fleets. Most commercial carriers have been using two new models of aircraft – the Boeing 787 and Airbus A350 – which consume less fuel while carrying the same number of passengers. Almost every airline is now using more fuel-efficient twin-engine planes, resulting in thousands of gallons of fuel saved with each flight. And finally, airlines have implemented cost-cutting by reducing the amount of catering on shorter flights. Instead, customers are urged to pre-order meals on longer-haul flights, resulting in less waste and saving on cost.
Summary:
The International Air Transport Association has raised the airline industry’s profit forecast for 2022 to $9.8bn. As fleets remained limited due to manufacturing difficulties faced by Boeing and Airbus, there was an increase in the demand for passenger and cargo transport. Freight revenues remained above pre-pandemic levels, although volumes were not. There has been an increase in the number of airlines with ongoing open skies agreements around the world. Airlines are keen on finding means to increase efficiency and reduce costs, while modernizing their fleets and urging customers to pre-order meals on longer-haul flights.
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The airline trade body doubled its forecast for industry profits this year to $9.8 billion after many groups signaled signs of recovery in their recent results.
The carriers benefited from a recovery in demand for passenger and cargo transportation at a time when fleet growth was limited by manufacturing difficulties at Boeing and Airbus.
The International Air Transport Association’s forecast compares with industry net losses of $3.6 billion for 2022 and IATA’s December forecast of $4.7 billion in net profits for this year. Iata forecasted revenues for 2023 would reach $803 billion, up 9% from 2022.
Willie Walsh, chief executive of Iata, said the airline’s financial performance for the year exceeded expectations, with higher profitability supported by “several positive developments”.
“China lifted Covid-19 restrictions earlier this year than expected,” Walsh he said, adding that freight revenues remained above pre-pandemic levels, although volumes were not.
“As far as costs, there’s some relief,” Walsh added. “Jet fuel prices, while still high, moderated in the first half of the year.”
https://www.ft.com/content/675a616f-7ca8-4ae7-8d0a-3c07cc8c6e44
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