Air carriers in Asia-Pacific including the Philippines are expected to further trim losses in 2023 driven by the growth in passenger demand, according to International Air Transport Association (IATA).
In a statement, IATA said Asia-Pacific carriers are expected to post a loss of $10 billion in 2022, narrowing to a $6.6 billion loss in 2023 as passenger demand growth of 59.8 percent is expected to outpace capacity growth of 47.8 percent by next year.
Over the year, the region is expected to serve 71 percent of pre-crisis demand levels with 76 percent of pre-crisis capacity.
“Asia-Pacific is critically held back by the impact of China’s zero COVID policies on travel and the region’s losses are largely skewed by the performance of China’s airlines who face the full impact of this policy in both domestic and international markets,” IATA said.
“Taking a conservative view of progressive easing of restrictions in China over the second half of 2023, we nevertheless expect strong pent-up demand to fuel a quick rebound in the wake of any such moves. The region’s performance receives a significant boost from profitable air cargo markets, in which it is the largest player,” IATA added.
However, IATA expects a return to profitability for the global airline industry in 2023 as airlines continue to cut losses stemming from the effects of the COVID-19 pandemic to their business in 2022.
In 2023, airlines are expected to post a small net profit of $4.7 billion, a 0.6 percent net profit margin. It is the first profit since 2019 when industry net profits were $26.4 billion, 3.1 percent net profit margin.
“Resilience has been the hallmark for airlines in the COVID-19 crisis. As we look to 2023, the financial recovery will take shape with a first industry profit since 2019. That is a great achievement considering the scale of the financial and economic damage caused by government imposed pandemic restrictions,” said Willie Walsh, IATA director- general.
In 2023, the airline industry is expected to tip into profitability.
“The expected profits for 2023 are razor thin. But it is incredibly significant that we have turned the corner to profitability. The challenges that airlines will face in 2023, while complex, will fall into our areas of experience. The industry has built a great capability to adjust to fluctuations in the economy, major cost items like fuel prices, and passenger preference. We see this demonstrated in the decade of strengthening profitability following the 2008 Global Financial Crisis and ending with the pandemic. And encouragingly, there are plenty of jobs and the majority of people are confident to travel even with an uncertain economic outlook,” said Walsh. – Myla Iglesias
