MANILA, Philippines — Profitability appears to be on the horizon for airlines globally as the pace of recovery of the aviation industry speeds up, according to the International Air Transport Association (IATA).
IATA said industry-wide profitability in 2023 appears within reach as strong pent-up demand, lifting of travel restrictions in most markets, low unemployment in most countries, and expanded personal savings are fueling a resurgence in demand.
IATA is now expecting lower industry losses for the year at $9.7 billion compared to its October 2021 forecast of $11.6 billion loss.
This represents a significant improvement from losses of $137.7 billion recorded in 2020 and $42.1 billion last year.
IATA said efficiency gains and improving yields are helping airlines to reduce losses even with rising labor and fuel costs.
“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.
“Losses will be cut to $9.7 billion 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,” he said.
With revenues rising as COVID restrictions ease and people return to travel, Walsh said the challenge for airlines this year is to keep costs under control.
Walsh said the reduction in losses so far has been the result of hard work to keep costs under control.
“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,” he said.
For Asia-Pacific airlines, IATA said strict and enduring travel restrictions, notably in China, along with an uneven vaccine rollout, have seen the region lag in the recovery to date.
However, as the restrictions diminish, travel demand is expected to increase quickly, it said.
Meanwhile, IATA has said Pegasus Airlines vice-chairperson of the board Mehmet Tevfik Nane has assumed his duties as chair of the IATA board of governors for a one-year term, succeeding JetBlue Airways CEO Robin Hayes.
IATA also announced that RwandAir CEO Yvonne Manzi Makolo be the chair of the board of governors from June 2023, following Nane’s term.