IATA: $2.25 profit per passenger, “which is less than the price of a cup of coffee or a subway ticket”

Global Airlines revised its 2023 profit estimate upward, more than doubling its original forecast from $4.7 billion to $9.8 billion, on strong air travel demand as the industry recovers from the COVID-19 pandemic.

“The pandemic years are behind us, borders are open as usual,” CEO Willie Walsh said at the annual meeting of the International Air Transport Association (IATA). However, he added that the rate of return, which has reached 1.2%, is still too low to ensure long-term financial sustainability of the sector.

Global airlines have been reporting good results in recent months as they prepare for a busy summer season. Demand for air travel shows no signs of slowing down despite inflation peaking.

Revenue levels for 2023 are approaching pre-pandemic levels, rising to an expected $803 billion from $838 billion in 2019.

“Many people don’t just need to travel, they want to travel. And they will continue to do so this year,” Walsh told Reuters. – The opportunities to move freely around the world tend to give consumers the confidence that they can spend money and continue to enjoy what they are doing. Quarantine has had a serious impact on the psyche of people. They began to appreciate freedom of movement more after being “locked up” for some time.”

The head of IATA told delegates (representing about 300 airlines) that ongoing supply chain problems and rising airport charges are slowing the industry’s recovery. “Suppliers do not address supply chain issues in a timely manner, which increases costs and limits our ability to develop aircraft,” he said. – Airlines are very upset. A solution must be found.”

Cargo volumes also remain quite low compared to 2019 and are expected to be 57.8 Mt in 2023, compared to 61.5 Mt in 2019, due to a slowdown in global trade.

Walsh also said that the recovery of the previous dynamics of the work of airlines is also hampered by the increase in airport charges. He added that despite a strong recovery in demand for air travel, the industry’s current low profit margins are unsustainable. The expert noted that the industry is making a profit of about $2.25 per passenger, “which is less than the price of a cup of coffee or a subway ticket.”

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