In IATA’s industry outlook announced in early December 2022, before China announced the reopening of the country’s borders, we projected that continued recovery of the aviation sector will help the global airline industry post an aggregated profit of US$4.7 billion in 2023, which represents a net profit margin of just 0.6%. Passenger demand is expected to reach 85.5% of 2019 levels, with traffic volume at 4.2 billion passengers, which will be the first time since 2019 for global volume to surpass the 4 billion mark. Cargo volumes are expected to decrease to 57.7 million tonnes from a peak of 65.6 million tonnes in 2021 due to in part to global economic uncertainty.
Airlines in North American, Europe and the Middle East are expected to post aggregated profits in 2023, while Asia Pacific carriers are expected to still report an aggregated loss of US$6.6 billion. Details can be found here (See section on regional round up). Our next traffic forecast update to the outlook will be in June.
"An assumption in IATA’s December 2022 outlook was that China would gradually reopen to international travel, and ease domestic COVID-19 restrictions progressively from the second half of 2023. Obviously, this scenario has changed. China’s earlier than expected opening will have a positive effect on the industry’s rate of recovery. How much faster the recovery would be compared with the previous projection will depend on factors such as the pace at which seat capacity can be restored, the extent and duration of travel restrictions and testing requirements that countries are imposing on travelers from China, and the global economic outlook and sentiments as we progress into the year." said Philip Goh, Regional Vice President, IATA Asia Pacific.
"On the whole so far, 2023 is looking optimistic. Lower oil price inflation and continuing pent-up demand are supporting the recovery. However, given the thin profit margins, airlines will need to be vigilant and flexible in responding to changes in the economic and geopolitical environment."
In terms of the recovery, global passenger demand had recovered to 68.5% of 2019 levels in 2022. The airlines in North America and Latin America are leading the way, with passenger demand at 88.7% and 85.8% of 2019 levels respectively. Due to the later reopening to travel, the recovery in the Asia Pacific region is the slowest at 44.4% of 2019 levels.
