As a result, airlines have more than doubled their revenue estimates for the current year, as the growth momentum is expected to continue during the year, after years of declines caused by the effects of the pandemic, but on the other hand, the “Fragile and unstable conditions in the global economy continue to weigh on industry-related estimates, and in light of current geopolitical developments, as well as related issues to supply chains.
And the year 2020, at the height of the Corona pandemic, was the “worst” for the aviation industry, according to data from the International Air Transport Association (IATA), and it saw a drop in revenue. passenger totals in the industry by 69 percent, to 189 billion. Net losses totaled $126.4 billion.
The sector significantly reduced its losses between 2020 and 2021 in 2022, recording losses of $3.6 billion, according to International Federation estimates this month, which included the sector returning to profit in 2023 , supported by a relative stability of the situation.
Growing demands from airlines
In this context, a report recently published by the British newspaper “Financial Times” revealed that airlines have submitted orders for the purchase of around 1,200 new aircraft in the first five months of the current year 2023. , confirming the industry’s growing demand as passenger traffic continues to recover in the wake of the outbreak.
Those numbers were bolstered by three high-profile deals, including Air India’s announcement in February of the purchase of 470 long-haul single-aisle widebody jets from Airbus and Boeing, according to research by aviation consultancy IBA.
And the large volume of airline inquiries confirms how quickly airline demand has rebounded to pre-pandemic levels, referring to a statement released by the International Air Transport Association, which revealed that travel interiors had returned to pre-pandemic levels and total passenger traffic had increased. 46% YoY in April, led by carriers in the Asia-Pacific region.
Airbus and Boeing, along with engine manufacturers, have struggled to meet ambitious delivery targets amid component shortages since the height of the pandemic.
further growth
For her part, Geneviève Giuliano, professor at the University of Southern California, specializing in transport, exposes in an exclusive statement to “Economy Sky News Arabia” the scenarios expected in her estimate of the evolution of the aviation sector. in light of the current situation in light of the aforementioned adjustment factors, as follows:
I expect further growth in passenger demand. We are currently seeing a sudden increase in travel delays during the Corona pandemic. I expect this increase to end next year. After that, I expect growth in the natural direction of the aviation sector (back to pre-pandemic levels).
The British newspaper’s report quotes IBA’s director of market analysis, William McClintock, as saying: “Airlines are racing to restore capacity, return stored planes and order new planes. .”
The net number of applications in 2022 reached 1,592 (nearly double the 812 applications filed in 2019). The bulk of net orders (1,436 to be exact) were for single-aisle aircraft, in particular Airbus’ best-selling A320 Family. Net orders for wide-body aircraft used on long-haul international flights reached 156, a fraction of the 148 in 2019.
McClintock said the general recovery “now looks sustainable.” “Before the pandemic, delivery rates exceeded orders and did not appear to be sustainable.”
Increase in passenger traffic
Professor Emeritus of Boston University’s Kostrom School of Business, Allen Michel, who specializes in airline economics, says in exclusive statements to the “Sky News Arabia” site:
Passenger traffic has increased significantly after the pandemic. Passenger traffic is now around 75% of pre-pandemic levels. Major economies have grown and air travelers will continue to grow.
And while confirming the positive trajectory of passenger traffic, which is leading to an increase in demand for airlines, amid promising steps, it at the same time indicates the success of the aviation industry in avoiding a post-pandemic recession. Corona, while warning that “if such a recession occurs (under the weight (of current economic developments), air traffic will be one of the industries affected.”
International airlines recently raised their expectations for the sector’s profits for the year 2023 by more than doubling them from $4.7 billion to $9.8 billion amid optimism driven by strong demand for travel as the sector recovers from the repercussions of the Covid-19 epidemic, according to the International Air Transport Association. Over the past few months, global airlines have posted strong results as they prepare for a busy summer season, with no signs of weakening travel demand despite rising inflation.
summer
Regarding the “summer season”, John Wilson, professor of management science at the College of Ivy Business at the University of Western Ontario, comments in an exclusive statement to “Economy Sky News Arabia”, saying: “Traffic passenger numbers has increased steadily since the outbreak began to come under control…and this summer in particular is shaping up to be one of the best seasons for the aviation industry in recent times,” in light of growing travel demand , as the new data show.
– Airlines expect to carry 4.35 billion passengers worldwide this year, which is close to the pre-Covid 2019 record of 4.54 billion. before the pandemic, since they reached $803 billion, compared to $838 billion in 2019.
However, the federation warned that this year’s profits will not include all geographic regions. Airlines in North America, Europe and the Middle East will make remarkable profits estimated at $11.5 billion. , $5.1 billion and $2 billion, respectively, while their counterparts in other regions Asia-Pacific and Latin America will record losses amounting to $6.9 billion, and Africa at 1.4 billion and 500 million dollars.
International Air Transport Association (IATA) chief executive Willie Walsh told the association’s annual meeting that continuing challenges, such as supply chain issues and high airport charges, are hampering recovery of industry.
Possible slowdown
For his part, David Gillen, professor at the UBC Sauder School of Business at the University of British Columbia, specializing in international aviation, believes that “the growth of the aviation sector will slow compared to the rate it settled after the epidemic”. .. However, the sector will continue to grow at an appropriate pace.”
In statements exclusive to the “Sky News Arabia Economy” website, he identifies a number of key factors that determine the shape of this growth, the most important of which is what will happen to economic growth and the extent of opening of China.
And he points out that “much of the demand today is a remnant of the restrictions that were in place during the epidemic”, while there are negative effects that will impose themselves, including rising costs. fuel, increased environmental restrictions and the war in Ukraine, in addition to the downsizing effect, which has led to a kind of shortage. What is in the pilots now, but above all there is a shortage experienced captains.
Additionally, James Moore, a professor in the Department of Industrial and Systems Engineering at the University of Southern California, says in exclusive statements to Sky News Arabia that the level of demand for air travel post-pandemic has surprised the whole industry. , adding: “We have seen a stronger recovery than expected.”
He adds: “They (the airlines) continue to try to take advantage of the opportunities presented by the current demand, which indicates a continuous increase in expectations in this environment, and therefore they (the airlines) have continued to expand their fleets ( in reference to new orders), in addition to placing new orders with manufacturers, and expanding pilot training programs.
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