Aviation industry profitability will return in 2023: Official

Doha: The Director-General of the trade association for the world’s airlines said that the “industry-wide profit should be on the horizon in 2023.”

International Air Transport Association (IATA) Director-General, Willie Walsh stressed that the aviation industry is “resilient” and “rebounding.” “People who longed for the freedom to fly are taking to the skies again—and in growing numbers. By next year, most markets should see traffic reach or exceed pre-pandemic levels.”

Moreover, the Director-General highlighted the significant role of Air cargo during the pandemic. “Air cargo stood out as a lifeline for vaccines, supply chains, and airline revenues throughout the COVID-19 crisis. And it has grown to be an even more vital contributor to revenues,” Walsh explained.

Based on the latest IATA analysis, losses in 2021 reached US$42bn, this year, it is expected to post US$9.7bn, a large improvement compared last year. Walsh stressed the industry is now “leaner, tougher, and nimbler.”

During the 78th IATA Annual General Meeting (AGM) and World Air Transport Summit (WATS) being held in the country, Walsh emphasised that the said data gives the public the feel on how the demand is coming back, and how well airlines have managed other aspects of their cost base. However, he admitted that they are still below the target where they were in 2019. “There’s still a lot of ground to make up before we can get into debate as to whether, we’ll see that taper off. I’m very optimistic and I think that the mood so far has been one of optimism.”

Although the outlook is positive, the business environment faces a difficult situation. Among these are: the rising inflation rate, soaring energy prices to 50 percent according to World Bank, Russia-Ukraine war which has destablised globalization, threatened the world’s food supply, and recreated a geopolitical divide not seen since the Cold War.

Also, fixing battered balance sheets carrying debts of US$650bn will be a monumental challenge for airlines.

“There is no way to sugar coat the bitter economic and political realities we face. But the desire to travel and the necessity of moving goods are both solid,” said Walsh. He continued: “This is a unique time for aviation. We have proven our resilience. And we are rebounding as a safe, sustainable, and diverse industry that is on its way to being profitable. The recovery from COVID-19, however, is coincident with a tectonic shift in geopolitics. The Russian invasion and subsequent war in Ukraine have shaken the foundations of globalization to which aviation has contributed so much, and that, in turn, enables so much of our business.”

The Director-General further reiterated on their commitment to sustainability. Last year’s AGM, IATA committed to achieve net zero by 2050. “Now we must turn our commitment into carbon reductions. Predicting what technologies will be available in 2050 is an imprecise science.”