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Middle East carriers drive air traffic surge to pre-pandemic levels

Global airlines stay on track for $9.8b profit in 2023

Published: Thu 6 Jul 2023, 3:48 PM

Updated: Thu 6 Jul 2023, 3:49 PM

By
Issac John

Travellers at Dubai International Airport. Carriers in the Middle East reported a 30.8 per cent increase in traffic compared to May a year ago. — KT file

Middle Eastern airlines recorded a remarkable jump in traffic in May year-on-year to exceed pre-pandemic levels, underscoring the vibrant resiliency and sustained growth in air travel demand as airlines globally are predicted to post a $9.8 billion net profit on near-record revenues of more than $800 billion in 2023.

The International Air Transport Association (Iata) said on Thuesday that carriers in the region reported a 30.8 per cent increase in traffic compared to May a year ago. Capacity climbed 25 per cent and the load factor pushed up 3.6 percentage points to 80.2 per cent as the region drove the recovery with May traffic at 17.2 per cent above 2019 levels.

“We saw more good news in May. Planes were full, with the average load factors reaching 81.8 per cent. Domestic markets reported growth on pre-pandemic levels. And, heading into the busy northern summer travel season, international demand reached 90.8 per cent of pre-pandemic levels,” said Willie Walsh, Iata’s director-general.

May 2023 traffic data shows continued strong growth in international air travel demand. Total traffic in May (measured in revenue passenger kilometres or RPKs) rose 39.1 per cent compared to May 2022. Globally, traffic is now at 96.1 per cent of May 2019 (pre-pandemic) levels.

Globally, domestic traffic for May rose 36.4 per cent compared to the year-ago period. Total May 2023 domestic traffic was 5.3 per cent above the May 2019 level. This is the second month in a row domestic traffic has exceeded pre-pandemic levels.

International traffic climbed 40.9 per cent versus May 2022 with all markets recording strong growth, led once again by carriers in the Asia-Pacific region. International RPKs reached 90.8 per cent of May 2019 levels, with Middle East and North American airlines exceeding pre-pandemic levels. The total industry load factor rose to 81.8 per cent, led by North American carriers at 86.3 per cent.

The Iata chief said people need and love to fly. The strong demand for travel is one element supporting a return to profitability by airlines. “In 2023, we expect airlines globally to post a $9.8 billion net profit. But a 1.2 per cent average net profit margin is just $2.25 per departing passenger. As a return, that is not sustainable in the long-term,” said Walsh.

He said the big surge in profit airlines are expected to make this year follows industry losses of $183 billon in the pandemic years. Iata expects 4.35 billion people to fly in 2023, about 96 per cent of the last pre-pandemic figure from 2019, partly driven by the reopening of China as well as the continuing demand for travel.

Walsh said while the pandemic has changed many things in aviation, it has not righted aviation’s famously unbalanced value chain. The latest indication came last week as European airports announced a $7 billion collective profit in 2022. In comparison, Iata estimates that European airlines made a $4.1 billion profit for the same year.

“We don’t begrudge any business hard-earned profits. But this does raise an interesting question. Is airport economic regulation effectively defending the public interest when a monopoly supplier (airports) can generate seemingly much healthier returns than the competitive businesses (airlines) they supply? Governments should at least take a look,” said Walsh.