(Representative Image: Reuters)
The global airline industry is projected to post a lower loss of USD 6.9 billion this year and eke out a "small net profit" of USD 6.9 billion in 2022, helped by higher passenger revenues and cost control by carriers, industry body IATA said on Tuesday.
At a briefing here, the International Air Transport Association (IATA) Director General Willie Walsh said India is seeing a "much stronger recovery" than the Asia Pacific region in general and the challenge will be in getting new aircraft as well as spare parts.
After being hit by the pandemic, India's domestic air traffic is recovering well and airlines are looking to expand their operations on local and international routes.
In its latest update on the global airline industry, IATA said the Asia Pacific region is critically held back by the impact of China's zero COVID policies on travel.
On Tuesday, IATA said the global airline industry is expected to return to profitability in 2023 and post a small net profit of USD 4.7 billion.
In 2022, airline net loss is expected to be USD 6.9 billion. This is significantly better than the loss of USD 42 billion and USD 137.7 billion in 2021 and 2020, respectively, it said.
Earlier in June, IATA projected the industry loss at USD 9.7 billion. In October 2021, it forecast a loss of USD 11.6 billion for this year.
"We are on the right path... but still a long way to go," Walsh said.
According to him, the expected profits for 2023 are "razor thin" but it is incredibly significant since the industry has turned the corner to profitability.
"North America is the only region to return to profitability in 2022, based on our estimates. Two regions will join ranks with North America in this respect in 2023; Europe and the Middle East.
"Next year Latin America, Africa, and Asia/Pacific will remain in the red, and we will have to look to the following years for their potential return to profitability," IATA said.
The industry group expects to end the year at around 70 per cent of 2019 passenger volumes.
This year, total revenue of global commercial airlines is pegged at USD 727 billion for this year and is expected to rise to USD 779 billion in 2023.
In 2021, the revenue stood at USD 506 billion.
Overall costs of airlines next year are expected to rise 5.3 per cent to USD 776 billion and the increase is estimated to be 1.8 percentage points below the revenue growth, thus supporting the industry's return to profitability, IATA said.
Next year, the total fuel spends of airlines is estimated at USD 229 billion, consistent at 30 per cent of the expenses, IATA said, adding that the forecast is based on Brent Crude at USD 92.3/barrel, down from an average of USD 103.2/barrel in 2022.
The split between passenger and cargo revenue moved very much in cargo's favour during the pandemic.
"This is starting to reverse as passenger traffic recovers but cargo revenue remains significantly above 2019 levels also in 2023," IATA Chief Economist Marie Owens Thomsen said.
"In 2023, passenger demand of 59.8 per cent is expected to outpace capacity growth of 47.8 per cent. Over the year, the region is expected to serve 70.8 per cent of pre-crisis demand levels with 75.5 per cent of pre-crisis capacity," the industry grouping said about the Asia Pacific region.
