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Air passengers to reach 83% of 2019 levels this year: IATA

Industry losses will drop to $9.7 billion this year compared to $137.7 billion in 2020 and $42.1 billion in 2021 as air industry recovery gathering pace despite uncertainty

Global airline industry is expected to cut losses by 16.4 per cent as air passengers are expected to hit 83 per cent of pre-pandemic levels this year, says a latest report.

The International Air Transport Association (Iata), which released its an upgraded industry outlook ahead of its annual general meeting in Doha, said aviation industry losses are expected to reduce to $9.7 billion this year from $11.6 billion predicted in October 2021 with a net loss margin of 1.2 per cent.

The global aviation body said industry’s return to profit is ‘within reach’ in 2023 despite ongoing uncertainty as losses are expected to drop to $9.7 billion this year compared to $137.7 billion in 2020 and $42.1 billion in 2021, reflecting a huge year-on-year improvement, Iata said.

Willie Walsh, director-general of Iata, said he remains confident that the industry will return to profitability in 2023.

“Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty,” Walsh said in a statement on Monday.

The aviation industry was sent reeling by the pandemic, with passenger numbers plunging 60 percent in 2020 and remaining 50 percent down in 2021. Airlines lost nearly $200 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.

“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,” Walsh said.

Speaking on a panel in Doha, Walsh said he is ‘not concerned’ about the current demand and supply environment.

The aviation body, which represents 290 airlines, accounting for 83 per cent of air travel worldwide, said more than 1,200 aircraft are expected to be delivered in 2022, while cargo volumes should reach a record 68.4 million tonnes despite economic challenges. North American airlines were expected to return an $8.8 billion profit this year, it added.

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In the Middle East, Iata said this year’s re-opening of international routes and long-haul flights in particular will provide a welcome boost for many airlines in the region. Region-wide, net losses are expected to narrow to $1.9 billion this year from a $4.7 billion loss in 2021 while demand (RPKs) is expected to reach 79.1 per cent of pre-crisis (2019) levels and capacity at 80.5 per cent.

“Strong pent-up demand, the lifting of travel restrictions in most markets, low unemployment in most countries, and expanded personal savings are fueling a resurgence in demand that will see passenger numbers reach 83 percent of pre-pandemic levels in 2022,” Iata said.

Check on controlling costs

The head of the world’s biggest airline trade body said the reduction in losses is the result of hard work to keep costs under control as the industry ramps up. He said the improvement in the financial outlook comes from holding costs to a 44 per cent increase while revenues increased 55 per cent.

“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,” Walsh said.

Revenues set to match 2019 levels

The global association said industry revenues are expected to post year-on-year growth of 54.5 per cent to $782 billion, about 93.3 per cent of 2019 levels. Flights operated in 2022 are expected to total 33.8 million, which is 86.9 per cent of 2019 levels (38.9 million flights), it said. Overall expenses are expected to rise to $796 billion.

“Passenger revenues are expected to account for $498 billion of industry revenues, more than double the $239 billion generated in 2021. Scheduled passenger numbers are expected to reach 3.8 billion, with revenue passenger kilometres (RPKs) growing 97.6 per cent compared with 2021, reaching 82.4 per cent of 2019 traffic,” Iata said.

About the cargo segment, Iata said cargo revenues are expected to account for $191 billion of industry revenues. That is down slightly from the $204 billion recorded in 2021, but nearly double the $100 billion achieved in 2019.

“Overall, the industry is expected to carry over 68 million tonnes of cargo in 2022, which is a record high. As the trading environment softens slightly, cargo yields are expected to fall 10.4 per cent compared with 2021,” Iata said.

— muzaffarrizvi@khaleejtimes.com