The recovery of the global airline market is going fast, according to IATA. Willie Walsh, general manager, is even positive about 2022. He is already talking about “business as usual”. This is reported by IATA at their annual Global Media Day in Geneva.
What worries IATA is the low level of service at both Schiphol and Heathrow Airport, the increase in airport taxes and the upcoming increase in the flight tax in the Netherlands from 1 January 2023.
“No one goes to an airport to shop. They shop because they have to wait. If there are no flights, there are no airports” – Willie Walsh
The recovery in the market continues to follow forecasts despite the headwinds that continued to emerge. In 2024, IATA expects the industry to return to the level of 2019. Profits are expected again from 2023, in 2022 the airlines reduced their losses. Only in Asia and the Pacific (China) is the recovery lagging behind. North America is the only region profitable in 2022.
What also has (had) an impact, according to Willie Walsh, is the availability of (engine) parts for aircraft. He had expected this after the pandemic, but the scale was still a surprise.
Ukraine no influence
The war in Ukraine has had no direct effect on the aviation industry, except for petroleum prices going through the roof.
European airlines are expected to see a loss of $3.1 billion in 2022 and a profit of $621 million in 2023. In 2023, passenger demand growth of 8.9% is expected to outpace capacity growth of 6.1%. During the year, the region will be able to serve 88.7% of demand with 89.1% of pre-crisis capacity.
North American airlines are expected to realize a profit of $9.9 billion in 2022 and $11.4 billion. By 2023, passenger demand growth of 6.4% is expected to exceed 5-year capacity growth. The region is expected to serve 97.2% of pre-crisis demand with 98.9% of pre-crisis capacity. In particular, the short travel restrictions in the USA during the pandemic have ensured this boost.
The number of unique city pairs is also important and is almost back to the level of 2019. This means that many routes have been restored. And what everyone knows: being connected via an air route to another city/country brings economic benefits and growth to a region/country.
Profit under pressure
In the industry’s prime, an airline averaged $10 per passengers in net profit. By 2023, that amount will be $1.11. By this, Walsh refers to the situation where airports currently charge “ridiculously higher amounts” for their services to airlines. This is a major pain point for IATA. On a total global turnover of €779 billion, the expected profit is €4.7 billion. That’s a margin of just 0.6%.
By 2050, the industry will have net-zero emissions. The goal is also to share more data for insights and better passenger experiences.
Passengers regain their “freedom to travel”. Research in 11 IATA markets shows that 70% of passengers are traveling the same or more than before the pandemic. For 85% of travelers, the economic situation affects their travel behaviour. However, 57% have no intention of changing their travel behaviour. Passengers also indicate:
- 91% say air connectivity is important to the economy
- Air travel is necessary for modern life (90%)
- Flying has a positive impact on a society say 87%
- Also, 91% of people familiar with the UN Sustainable Development Goals indicate that aviation is an important factor for development
What also plays a big role in the Netherlands, and which IATA together with BARIN and Airlines For Europe have sent an e-mail to Minister Kaag about, is the new tax on airline tickets. They express their great concern in an open letter about the huge impact it will have on the industry and the possible loss of 62,000 jobs in the Netherlands. IATA also says very clearly: “Aviation is not the enemy; CO2 is”
The IATA Global Media Days are organized every year by IATA at their office in Geneva. During the two-day event, more than 100 journalists from around the world are updated on developments in the aviation industry.