Airline Industry Confident Despite Economic Challenges
DOHA, Qatar—The air transport industry’s recovery remains uneven region to region and there are concerns about the general economy and a global recession, but airline leaders seem confident in a return to pre-pandemic levels of growth.
IATA chief economist Marie Owens Thomsen laid out a mixed bag in an industry outlook presented June 20 during the association’s annual general meeting in Doha. She acknowledged that Russia’s invasion of Ukraine, with the associated significantly higher oil prices, had “taken the fizz out of the economy” with GDP now at a cooler 3.4%, down from 5.8% last year.
Increased costs related to climate change, geopolitical conflicts, energy price hikes and the heavy debt burdens that airlines now carry will be challenging, Owens Thomsen said, which means higher costs for fuel, labor and infrastructure. Overall, it means that airline RPKs in 2022 across the whole industry will still be at just 43.4% of 2019 levels.
However, Owens Thomsen said the economic challenges did not necessarily mean there will be a recession and within the industry, some regions are faring better than others.
Overall, airlines are expected to cut their losses from -$42.1 billion in 2021 to -$9.7 billion in 2022. North American carriers are expected to buck the trend and post a collective net profit of $8.8 billion in 2022. European airlines will get closer to profitability with a $3.9 billion net loss and Middle East airlines are expected to narrow their loss to -$1.1 billion.
Latin American carriers recovered well in 2021 but are still expected to post a $3.2 billion net loss this year, while Asia-Pacific and Chinese airlines, still dealing with COVID-19-related travel restrictions, are forecast to see net losses decline to -$8.9 billion. African carriers are expected to post a $0.7 billion net loss.
Owens Thomsen said that overall, airlines were seeing a “phenomenal and rapid improvement that is testament to the resilience of the industry” and there was “a lot of industry confidence” that was seen in behavior such as airlines taking more and more new aircraft deliveries.
Emirates President Tim Clark was among those airline chiefs demonstrating confidence. In a media roundtable on the sidelines of the AGM, he said the industry was “remarkably resilient” and had always come back from crises, including the 9/11 terrorist attacks in 2001 and the 2008/09 financial crisis. He said he did not see the pandemic crisis being any different, although he did express concern about the long-term impact of what he called the “geopolitical wall” that has resulted from Russia’s invasion of Ukraine.
Outside of that concern, he said the demand for air travel was coming back “at huge speed” wherever pandemic-related restrictions were lifted.