Sun, 29 Jan 2023

Airlines predict profits in 2023, clash with airports

Robert Besser
10 Dec 2022, 14:36 GMT+10

LONDON, England: While a new conflict with airports erupted this week over rising air fares and ground charges, still, international airlines are predicting their first profits in 2023, as air travel rebounds from the start of the COVID-19 pandemic in 2019.

Due to the pandemic, airlines lost tens of billions of dollars in income in 2020 and 2021, but air travel has partially recovered, though some airports have struggled to cope.

The International Air Transport Association (IATA) expects a net profit of $4.7 billion for the industry in 2023, with more than 4 billion passengers expected to fly.

For 2022, IATA narrowed its forecast for industry-wide losses to $6.9 billion from $9.7 billion.

Talking about the projected 2023 return to profit, IATA Director-General Willie Walsh said, "That is a great achievement, considering the scale of the financial and economic damage caused by government-imposed pandemic restrictions," as quoted by Reuters.

However, he warned that due to regulations, high costs and inconsistent government policies, as well as a long-running disputes with airports, many airlines will continue to struggle next year.

Tensions have been high since Europe's summer travel chaos, with airports pointing the finger at airlines.

In an interview with Reuters, Olivier Jankovec, director-general of airport industry association ACI Europe, said, "Consumers are tolerating massive increases in air fares by airlines, which reflects both inflationary pressures and the fact that they tightly control the capacity they put in the market," as reported by Reuters.

Meanwhile, IATA Chief Economist Marie Owens Thomsen warned that the risk to the latest forecasts remained "skewed to the downside," and the "key variable" would be China.

Also, Reuters reported that Beijing has begun easing strict zero-COVID-19 restriction and may announce 10 new easing measures as early as this week.

If China does not loosen restrictions, the profitability of airlines would be affected, while some countries suffering from recession in 2023 presents another risk, the IATA stressed.

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