Jun. 6—AMMAN- Despite the economic uncertainties and a myriad of challenges, the air transport industry appears to be moving towards a profitable and sustainable future, according to IATA Director General Willie Walsh.
The industry has seen a resurgence in passenger traffic, reaching over 90% of 2019 levels. This resurgence signals a return to normalcy as people begin to travel for business, leisure, and reconnecting with loved ones, Walsh said.
However, despite the overall profitability of the industry, profit margins remain thin. With revenues totaling $803 billion, airlines are expected to share a net profit of $9.8 billion in 2023. This equates to a modest average earning of $2.25 per passenger. Although not sustainable in the long term, the rate of recovery is promising, particularly considering the industry's per-passenger loss of $76 in 2020, Walsh said during the group's annual meeting.
Challenges still abound. Rising inflation, cost pressures, and a labor shortage in certain areas pose significant obstacles to the industry's growth. Frustrations have been further amplified by Original Equipment Manufacturers' (OEMs) slow response to supply chain blockages, which are escalating costs and hampering the deployment of aircraft, he said.
In addition, the industry has experienced financial pressure from oil companies profiting from high jet fuel costs and airports shifting the burden of their inefficiencies onto airlines. Examples include Schiphol Airport's continued 37% charges hike over three years, South African airports' proposed 38% charges increase, and the demands of Air Traffic Control (ATC) for a 63% hike, according to Walsh.
Furthermore, European airlines have faced a €1.9 billion increase in air traffic management costs in 2022, which has resulted in tripling anticipated delays, missed capacity, and environmental targets.
In light of these issues, the calls for lighter regulation of the industry's monopoly suppliers must not be heeded without serious consideration from government bodies.
Despite these considerable challenges, the fact that airlines are turning a profit at the industry level is impressive. The report highlights the potential for growth and profitability in the industry while underscoring the need for improved regulation, cost management, and operational efficiency, Walsh added.
The air transport industry, in spite of the trials and tribulations, has proven its resilience and value to the global community. Public sentiment towards the sector is decidedly positive, according to recent survey data. The vast majority, 87%, believe that air travel is critical and needs to be sustainable without curtailing freedom of movement. An impressive 88% of people feel that air travel positively impacts society, he added.
Air travel is not just appreciated for its role in connecting different parts of the world, it is also recognised for its contribution to global sustainability efforts. A significant 82% of people identify aviation as a key player in achieving the UN's Sustainable Development Goals. An overwhelming 91% view air connectivity as a modern necessity, and 81% of travelers cherish their ability to fly more now than before the pandemic.
The faith placed in the air transport industry by the public is well-founded. In the past year alone, airlines have successfully transported goods valued at $8.5 trillion, bolstering enormous economic opportunities across the globe. In 2023, the industry is poised to safely facilitate journeys for an estimated 4.4 billion flyers. These travelers will be able to conduct business, reconnect with loved ones, explore the world's wonders, fulfill their dreams, and broaden their horizons.
The air transport industry's value is inextricably tied to its commitment to safety, efficiency, and sustainability. As it continues to navigate the challenges and opportunities of the post-pandemic world, its role in facilitating global connectivity and sustainable development remains as crucial as ever, he added.
(c)2023 the Jordan Times (Amman, Jordan)
Visit the Jordan Times (Amman, Jordan) at www.jordantimes.com
Distributed by Tribune Content Agency, LLC.