The COVID-19 pandemic had a profound impact on air traffic worldwide. The global aviation industry experienced an unprecedented downturn as travel restrictions, border closures, and health concerns led to a significant reduction in passenger demand. Airlines faced immense financial challenges, with many forced to ground a substantial portion of their fleets and implement cost-cutting measures to survive.
Amid the turmoil in the financial sector, high inflation, the ongoing effects of Russia’s invasion of Ukraine, and three years of COVID, make global economic outlook once again uncertain. Because of that, all the optimistic forecasts about the rapid recovery of the aviation industry can only be encouraging.
Very Positive Forecasts for Aviation Sector
The global aviation sector, badly hit during the pandemic, is on its way to a spectacular recovery this year when it records almost the same number of passengers as in 2019 and once again makes a profit. The ongoing easing of COVID-19-related restrictions by governments around the globe is releasing pent-up demand from the previous two years, when countries had closed their borders. However, companies warn that the recovery is still uncertain.
The International Civil Aviation Organization (ICAO) predicts that by the first quarter of 2023, air passenger demand will quickly return to pre-pandemic levels on the majority of routes, and by the end of the year, it will have increased by about 3% over 2019 figures.
The airline industry body, IATA, has significantly upgraded its prediction for profitability in 2023 as passenger numbers almost recover to pre-Covid-19 levels.
IATA projects $9.8 billion in net earnings
IATA projects that airlines will generate $9.8 billion in net earnings this year, a financial performance that IATA director general Willie Walsh describes as “beating expectations.” “We’re seeing very strong bookings. Certainly, all the airline CEOs that I’m talking to are seeing not just good demand for year-end travel, but they continue to see demand as they looked through the year“, he said at a conference in Riyadh. The IATA projected a global industry net profit of only $4.7 billion in December.
According to Marie Owens Thomsen, IATA’s senior vice president of sustainability and chief economist, the industry’s “amazing” turnaround in 2023 — only three years after a historic net loss of $137.7 billion in 2020 and accrued $183.3 billion in net losses for 2020-2022 – demonstrates its potential. “It shows how magnificently resilient the industry is, being able to bounce back so rapidly from a near total halt“, Thomsen says.
EU Commission Director General for Mobility and Transport Henrik Hololei told Reuters passenger traffic in Europe could return to pre-pandemic levels in 2023 if the pace of the rebound is sustained.
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