Airlines’ profit to be $9.8bn in 2023

Willie Walsh, Director General, IATA, addressing the 79th annual general meeting (AGM) of the association in Istanbul, said that despite the financial, supply chain and safety challenges, the outlook for global aviation industry looks positive and airlines will share $9.8 billion profit in 2023.

Suhani Sood

The 79th Annual General Meeting (AGM) of the International Air Transport Association (IATA) was held in Istanbul from 4-6 June 2023. Addressing the meeting, Willie Walsh, Director General, IATA, said that there was a 90 per cent rise in passenger traffic as compared to 2019 levels and airports, hotels and local economies are showing tremendous improvement and profit. He, however, expressed concern over shortage of planes, costly air fares, usage of sustainable fuel and decarbonizing aviation, and limitations in deploying aircraft.

Supply chain issues

Walsh specified that supply-chain constraints are going to be one of the biggest challenges in the aviation sector. “Shortages will be noticeable when it comes to engine parts, which would delay the delivery of new aircraft from Boeing and Airbus,” he said.

Citing the example of Go First, he said, “The supply chain issues severely affected a few Indian airlines with 100 aircraft grounded due to delays in supply of spare parts and engines.”  As a result, Go First was forced to seek insolvency, which resulted in high air fares.

Financial performance

Sharing financial data, he said that airlines would share $9.8 billion profit with $803 billion revenue in 2023. “This level of profitability is not sustainable. But considering we lost $76 per passenger in 2020, the velocity of recovery is strong,” he said.

Talking about the challenges, he said that inflation, acute cost pressure and shortage of manpower are reasons for high air fares. Mentioning about original equipment manufacturers (OEMs), he said, “OEM suppliers have been too slow in dealing with supply chain blockages that are both raising costs and limiting our ability to deploy aircraft.”

Sustainable aviation fuel

Walsh emphasized on the need for using sustainable aviation fuel (SAF), as production of SAF is not even 0.1 per cent of what is needed to become net zero. SAF production nearly tripled in 2022. “Reaching 30 billion litres by 2030 is challenging but achievable,” he said.

Conclusive comments

Walsh claimed that the airlines will return to profitability in 2023. Praising the development of airlines and airports, he commented, “Airlines and airports were criticized last year for not getting resources in place in time for the recovery. However, I think the airlines have done their bit. Most airports I think are in good shape.” He concluded his speech saying, “Taking overall picture into account, we can be positive about this year.”

Highlights

  • 87% believe that flying is critical, and we must find a way to fly sustainably without restricting travel
  • 88% feel that air travel has a positive impact on society
  • 82% recognize aviation as a key contributor to the UN’s Sustainable Development Goals, and
  • 91% see air connectivity as a modern necessity and
  • 81% of travellers appreciate the freedom to fly more today than they did pre-pandemic

 

 

 

 

 

 

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