DOHA (AFP, REUTERS) – Air passengers are expected to hit 83 per cent of pre-pandemic levels this year and the aviation industry’s return to profit is “within reach” in 2023, the International Air Transport Association said on Monday (June 20).
“Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty,” IATA director-general Willie Walsh said in an upgraded industry forecast for 2022.
The air industry was sent reeling by the pandemic, with passenger numbers plunging 60 per cent in 2020 and remaining 50 per cent down in 2021. Airlines lost nearly US$200 billion (S$277 billion) over two years.
While some firms in the sector went bankrupt, others – backed often by states – have emerged from the pandemic with profits intact.
Reflecting the enduring disruption, IATA was forced to move its annual general meeting from Shanghai to Qatar as China continues to grapple with the pandemic.
Global airlines are now expected to post a US$9.7 billion loss in 2022, in a sharp improvement from a revised US$42.1 billion loss in 2021, IATA said.
The 2022 forecast is nearly US$2 billion better than an earlier expectation of a US$11.6 billion loss.
Last year’s losses also improve on an earlier forecast of US$52 billion, though airlines meeting in Qatar have been warned high oil prices and inflation risk denting the fragile recovery.
“Our industry is now leaner, tougher, and nimbler,” Walsh said, adding that “industry-wide profit should be on the horizon in 2023”.
North America is expected to remain the strongest-performing region and the only one to post a profit in 2022, expected at US$8.8 billion.
In Asia, where Chinese borders remain closed and its domestic market under strain due to a zero-Covid-19 strategy, airlines are forecasting a collective US$8.9 billion loss.
The improved outlook comes as airports and airlines race to hire thousands to cope with resurgent demand as people seek to make up for vacations lost during the pandemic.
Some analysts have voiced concerns that soaring fares and pressure on consumer spending from inflation and rising borrowing costs could cause demand to fall sharply after the northern summer peak.
In an interview, Walsh played down concerns of a so-called “demand cliff” that would spell a short-lived recovery.
“I don’t think it’s a flash in the pan. I think there is some pent-up demand being fulfilled at the moment, but you’ve got to remember we’re still well below where we were in 2019,” he told Reuters. “So I think there’s still a lot of ground to make up before we can get into the debate as to whether we’ll see that taper off.”