The airline industry will return to profit next year as pent-up demand for travel sustains bookings even as the global economy tightens, the International Air Transport Association trade group predicted.
Losses this year are likely to total $9.7 billion as air travel begins its recovery from the coronavirus crisis, IATA said Monday in an update at its annual meeting in Doha, an improvement on the $11.6 billion deficit predicted at the previous gathering last October.
“Industry-wide profit should be on the horizon in 2023,” IATA Director General Willie Walsh told the gathering of airline chiefs. “We are rebounding. By next year, most markets should see traffic reach or exceed pre-pandemic levels.”
Walsh said that while “there is no way to sugar coat the bitter economic and political realities,” of worldwide inflation, “the desire to travel and the necessity of moving goods are both solid.”
The return to profit is already underway in North America, with airlines there now expected to post a collective net income of $8.8 billion this year. While all other regions will still make a loss, passenger numbers worldwide are forecast to reach 83% of pre-pandemic levels.
Customers can expect to see higher fares as a consequence of surging fuel prices, especially outside the U.S., where a lack of hedging led to an immediate hike, Walsh cautioned. On the positive side, higher jet fuel prices could encourage the switch to sustainable aviation fuel, with the price differential between the two now much narrower, he said.