airline
The airline industry is experiencing a significant recovery, supported by a recovery in travel demand following the coronavirus pandemic, which has encouraged airlines to advance their various plans, including fleet modernization and training programs, which have boosted rates for the first few months of the year. The need for new aircraft.
As a result, airlines have more than tripled their revenue forecasts for this year, expecting growth to continue this year after years of declines caused by the pandemic, but on the other hand, “fragile” and uncertainties facing the global economy Conditions continue to cloud industry-related estimates, taking into account current geopolitical developments, as well as supply chain-related issues.
According to the International Air Transport Association (IATA), 2020, the worst year of the coronavirus pandemic, was the “worst” for the airline industry, whose total passenger revenue fell 69% to $189 billion . Net losses totaled $126.4 billion.
The industry’s 2020-2021 losses of $3.6 billion in 2022, including a return to profitability in 2023, support the situation, according to estimates this month by the International Federation. Stablize.
Increased demand from airlines
In this context, a recent report published by the British “Financial Times” shows that airlines have submitted purchase orders for about 1,200 new aircraft in the first five months of 2023, confirming the growth of the aviation industry’s demand for passenger transportation. After the epidemic, traffic continued to resume.
Those figures were backed up by three high-profile deals, including Air India’s announcement in February to buy 470 single-aisle long-haul wide-body jets from Airbus and Boeing, according to research by aviation consultancy IBA.
And the deluge of requests from airlines confirms how quickly airline demand has bounced back to pre-pandemic levels, citing a statement from the International Air Transport Association showing that domestic travel has returned to pre-pandemic levels, with total passenger traffic With a 46% increase year-on-year in April, Asia-Pacific airlines led the way.
Since the height of the pandemic, Airbus and Boeing, as well as engine makers, have struggled to meet ambitious delivery targets due to parts shortages.
further growth
For her part, USC transportation professor Genevieve Giuliano outlined in an exclusive statement to “Economy Sky News Arabia” her current situation in light of the aforementioned recovery factors:
- I expect further growth in passenger demand.
- We are currently witnessing a sudden increase in travel delays during the corona pandemic.
- I expect this growth to end next year.
- After that, I expect the airline industry to move in its natural direction (return to pre-pandemic levels).
The UK newspaper report quoted IBA director of market analysis William McClintock as saying: “Airlines are scrambling to restore capacity, return planes in storage and order new ones…they are all eager to be at the front of the delivery queue”
- Net filings in 2022 amount to 1,592 (nearly double the 812 applications filed in 2019).
- The majority of net orders (1,436 to be exact) were for single-aisle aircraft, particularly Airbus’ best-selling A320 family.
- Net orders for wide-body aircraft for long-haul international flights reached 156, a fraction of the 148 recorded in 2019.
The broad recovery now “looks sustainable,” McClintock said. “Before the pandemic, deliveries outpaced orders, and that doesn’t appear to be sustainable.”
Passenger traffic increased
Alan Michel, a professor emeritus at Boston University’s Kostrom School of Business who specializes in aviation economics, said in an exclusive statement to the Arab Sky News website:
- Passenger traffic has increased significantly post-pandemic.
- Passenger traffic is now about 75% of pre-pandemic levels.
- Major economies have been growing and air travel will continue to grow.
In a promising step, while confirming that the positive trajectory of passenger traffic has led to increased demand for airlines, it simultaneously suggests that the airline industry has successfully avoided a post-corona pandemic recession, while warning that “if such a recession occurs (Under the weight of (the current economic development) air traffic will be one of the industries that will be impacted.”
- International airlines recently more than doubled the industry’s 2023 profit forecast to $9.8 billion from $4.7 billion, as strong demand for travel drives up demand as the industry recovers from the impact of the Covid-19 pandemic. Here comes the optimism. International Air Transport Association.
- Global airlines have reported strong results over the past few months as they gear up for a robust summer, with travel demand showing no sign of abating despite rising inflation.
summer
For “summer,” John Wilson, professor of management at the University of Western Ontario’s Ivy League School of Business, told Sky News Arab Economics in an exclusive interview: “Passenger traffic has grown steadily and new data shows that since the outbreak began to be brought under control, especially this year. Summer will be one of the best seasons for aviation in recent memory.”
Airlines are expected to carry 4.35 billion passengers globally this year, close to the pre-COVID record of 4.54 billion set in 2019.
Projected revenue levels in 2023 are also close to pre-pandemic levels, rising to $803 billion compared to $838 billion in 2019.
However, the federation warned that this year’s profit would not include all geographic regions. Air navigation companies in North America, Europe and the Middle East will post solid profits, estimated at $11.5 billion, $5.1 billion and $2.0 billion, respectively, while peers in other regions will record losses of $6.9 billion in Asia Pacific and Latin America, and Africa, respectively. For 1.4 billion US dollars and 500 million US dollars.
Ongoing challenges such as supply chain issues and high airport fees are holding back the industry’s recovery, IATA Director General Willie Walsh told the association’s annual conference.
may slow down
David Gillen, a professor of international aviation at the UBC Sauder School of Business at the University of British Columbia, believes that “the growth rate of the aviation industry will slow down compared with the post-pandemic rate . . . However, the industry will continue to grow at an appropriate rate. “
In an exclusive statement to the Sky News Arab Economy website, he identified some key factors that will determine the shape of growth, not the least of which is what will happen to economic growth and how open China is.
He noted that “much of today’s demand is a remnant of the restrictions that were in place during the pandemic,” while there are also negative effects, including rising fuel costs, increased environmental restrictions and the war in Ukraine, which, in addition to the impact of layoffs, has created a shortage that is now What pilots have, but more importantly lack of experienced captains.
Separately, James Moore, professor of industrial and systems engineering at the University of Southern California, said in an exclusive statement to Sky News Arabia that the level of post-pandemic air travel demand has taken the industry by surprise, adding: “We’ve seen A stronger recovery than expected.”
He added: “They (airlines) continue to try and take advantage of the opportunities presented by the current demand, which shows that expectations are increasing in this situation, so they (companies) continue to expand their fleets (referring to new orders), in addition to sending orders to manufacturers. Place new orders and expand pilot training programs.