Aviation sector's income to exceed $800B level this year, for 1st time since 2019, International Air Transport Association expects
Gokhan Ergocun |05.06.2023 -
ISTANBUL
The International Air Transport Association (IATA) on Monday announced its forecast that the aviation sector's net profits will reach $9.8 billion in 2023, more than twice last year's figure of $4.7 billion.
In 2023, some 4.35 billion people are expected to travel by air, which is close to 2019 figures, the IATA said during its annual meeting in Istanbul.
This year, the air cargo volume is also expected to reach 57.8 million tons, while in 2019, the amount of air cargo was 61.5 million tons.
The overall income of the sector is forecasted to reach $803 billion, an annual rise of 9.7%, exceeding the $800-billion level for the first time since 2019.
The sector's expenditures will reach $781 billion this year, the association also predicted.
Willie Walsh, the director general of the association, said the aviation sector's costs eased partially, thanks to fuel prices, although still high but moderate.
The sector's return to net profitability is seen as a great success, even with a 1.2% net profit margin, he noted.
He added that operating with profitability in a period of economic uncertainty seems to be an important success, as the net profit increase came after the biggest loss of $183.3 billion in aviation history in the period 2020-2022.
The IATA also said the current inflation, the ongoing Russia-Ukraine war, supply chain issues, and regulator costs are risks for the sector in the upcoming period.
International air fares likely to keep rising, says aviation group
Passengers can expect to pay more as carriers turn to ‘greener’ fuel to meet emissions targets, warns Iata
Gwyn Topham
Passengers can expect to pay more as carriers turn to ‘greener’ fuel to meet emissions targets, warns Iata
Gwyn Topham
Transport correspondent
THE GUARDIAN
THE GUARDIAN
Tue 6 Jun 2023
International air fares are likely to keep climbing from their current highs over the next 10-15 years, with the cost of sustainable fuels expected to drive up ticket prices, according to the global airlines body Iata.
Extraordinary demand for travel since the Covid pandemic has led to steep fare rises on many routes, and Iata said consumers could expect to pay more as airlines increase the usage of scarce “greener” jet fuels in response to government mandates to cut aviation’s carbon emissions.
Willie Walsh, the director general of Iata and former chief executive of British Airways, said: “We’re going to require more and more SAF [sustainable aviation fuel], and that means more and more expense.”
While Walsh said that some economists believed sustainable fuels could eventually become cheaper than kerosene, he added: “I see certainty in the next 10-15 years that we’re looking at a significant increase in fuel costs. Unless there’s some compensating reduction in other costs – and I don’t see that – then people have to expect that there will be an increase in in average fares as we go forward.”
He added: “It will mean higher fares, because sustainable aviation fuel is more expensive than your traditional jet kerosene. And as we transition to net zero, it is going to cost some money.”
Airline costs have been driven up significantly as oil prices soared after Russia’s invasion of Ukraine, as well as higher labour costs. Walsh also pointed to constrained capacity due to a lack of spare parts, which have left some airlines unable to operate their full fleets.
Despite the much higher fares passengers are having to pay on many routes this summer, Iata said its analysis showed fares worldwide were still around 2019 levels in real terms at the start of 2023, having lagged behind inflation over the course of the pandemic.
Last year, Ryanair said the era of ultra-cheap flying was over. The coming impact of SAFs was suggested in a recent update of the UK’s sustainable aviation roadmap to net zero by 2050, which relies largely on offsetting and SAFs and replacing fleets with more fuel-efficient aircraft to slash net emissions.
It projected that fewer people would fly in coming decades as a result of being priced out – a “demand reduction impact” that would account for about 14% of the required cuts to hit the target.
However, airlines are reporting rising custom despite higher prices.
The president of Emirates airline, Sir Tim Clark, said the “eye-opening” demand for air travel, even in premium cabins at high fares, defied economic wisdom. He added: “In winter last year, for every seat we sold another five people wanted it … We could have put it out to auction if we’d wanted to.skip past
“People who used to fly at the old fare levels are piling in at the new fare levels. It just doesn’t seem to make sense in the way we used to understand it. All I know is that we’re moving – so we’ll take it.”
Clark, whose airline was a notable opponent of the capacity cuts imposed at London Heathrow last summer, warned the British government it needed to do more to support international aviation.
Clark said: “The UK needs all the help it can get. If it’s going to work with Brexit, and you’ve said yah-boo Europe, it’s not where we need to be, we need to be in China, India, Australia, America, then you’ve got to move people and goods to those places. So [airline capacity] is vital. If that is lost on the government of the UK, they will pay the price.”
International air fares are likely to keep climbing from their current highs over the next 10-15 years, with the cost of sustainable fuels expected to drive up ticket prices, according to the global airlines body Iata.
Extraordinary demand for travel since the Covid pandemic has led to steep fare rises on many routes, and Iata said consumers could expect to pay more as airlines increase the usage of scarce “greener” jet fuels in response to government mandates to cut aviation’s carbon emissions.
Willie Walsh, the director general of Iata and former chief executive of British Airways, said: “We’re going to require more and more SAF [sustainable aviation fuel], and that means more and more expense.”
While Walsh said that some economists believed sustainable fuels could eventually become cheaper than kerosene, he added: “I see certainty in the next 10-15 years that we’re looking at a significant increase in fuel costs. Unless there’s some compensating reduction in other costs – and I don’t see that – then people have to expect that there will be an increase in in average fares as we go forward.”
He added: “It will mean higher fares, because sustainable aviation fuel is more expensive than your traditional jet kerosene. And as we transition to net zero, it is going to cost some money.”
Airline costs have been driven up significantly as oil prices soared after Russia’s invasion of Ukraine, as well as higher labour costs. Walsh also pointed to constrained capacity due to a lack of spare parts, which have left some airlines unable to operate their full fleets.
Despite the much higher fares passengers are having to pay on many routes this summer, Iata said its analysis showed fares worldwide were still around 2019 levels in real terms at the start of 2023, having lagged behind inflation over the course of the pandemic.
Last year, Ryanair said the era of ultra-cheap flying was over. The coming impact of SAFs was suggested in a recent update of the UK’s sustainable aviation roadmap to net zero by 2050, which relies largely on offsetting and SAFs and replacing fleets with more fuel-efficient aircraft to slash net emissions.
It projected that fewer people would fly in coming decades as a result of being priced out – a “demand reduction impact” that would account for about 14% of the required cuts to hit the target.
However, airlines are reporting rising custom despite higher prices.
The president of Emirates airline, Sir Tim Clark, said the “eye-opening” demand for air travel, even in premium cabins at high fares, defied economic wisdom. He added: “In winter last year, for every seat we sold another five people wanted it … We could have put it out to auction if we’d wanted to.skip past
“People who used to fly at the old fare levels are piling in at the new fare levels. It just doesn’t seem to make sense in the way we used to understand it. All I know is that we’re moving – so we’ll take it.”
Clark, whose airline was a notable opponent of the capacity cuts imposed at London Heathrow last summer, warned the British government it needed to do more to support international aviation.
Clark said: “The UK needs all the help it can get. If it’s going to work with Brexit, and you’ve said yah-boo Europe, it’s not where we need to be, we need to be in China, India, Australia, America, then you’ve got to move people and goods to those places. So [airline capacity] is vital. If that is lost on the government of the UK, they will pay the price.”
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