The International Air Transport Association (IATA) is expecting the airline industry to turn profitable in 2023, after suffering huge losses for three consecutive years.
In its latest outlook for the aviation industry, IATA expects airlines to make a small profit of of $4.7 billion in 2023, making it the first year of profits after the COVID-19 outbreak.
But for the current year, airlines will continue to be in the red with net losses expected to be $6.9 billion. However, this number will be significantly lower than losses of $42 billion in 2021 and $137.7 billion in 2020.
IATA expects overall revenues to grow by 43.6 percent compared to 2021, reaching an estimated $727 billion.
“Improved prospects for 2022 stem largely from strengthened yields and strong cost control in the face of rising fuel prices,” IATA said.
The optimism is also supported by encouraging passenger behaviour.
A recent IATA poll of travellers in 11 global markets revealed that nearly 70 percent are travelling as much or more than they did prior to the pandemic. And, while the economic situation is concerning to 85 percent of travellers, 57 percent have no intention to curb their travel habits. Ninety-one percent of respondents said that connectivity by air is critical to the economy.
While IATA is confident about profits, CAPA India feels return to profitability may be challenging given the continued uncertainty externally which may continue for the most part of 2023.
It said factors like fuel prices, currency, supply-chain issues, likely recession and geopolitical conflicts will be major headwinds for the sector in 2023.
“However, the financials are improving significantly is a relief and we expect top airlines around the globe to continue record profitability but overall industry financials may continue to be challenging,” CAPA India told CNBC-TV18.
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