The International Air Transport Association (IATA) announced at its annual meeting in Doha that there has been a sharp improvement in the finances of global carriers with an anticipated 2022 loss of US$9.7 million as opposed to a US$42.1 billion loss in 2021 and that it might be possible for these airlines to become profitable in 2023.
However, while restrictions regarding air travel have been considerable relaxed over the last few months, rising inflation in many countries, coupled with dramatically rising fuel costs will create new problems for the industry with consequential rising airfares. “We have a certain degree of insensitivity to prices this year,” IATA Chief Economist Marie Owens Thomsen said, citing high household savings rates during the pandemic and pent-up travel demand. “That could fade into next year.”
Currently a number of carriers have seen the boom in air travel as being what is referred to as “revenge travel” which is a consequence of pent-up demand. “The demand is pent up. It is revenge travel,” Malaysia Airlines Chief Executive Izham Ismail said. “Airfares have gone up tremendously. It is not only in Malaysia or Malaysia Airlines – it is throughout the industry globally. If the price continues to be high the demand will taper off.”
As Air New Zealand pointed out, the anticipated hike in prices could well be mistaken by passengers as an attempt to claw back some of the losses made over the previous couple of years when, in fact, all they are doing is trying to mitigate the current increase in running costs. However, the pent-up demand has been good for some operators. Hawaiian Airlines Chief Executive Peter Ingram said demand from the U.S. mainland and Canada was “incredibly robust”, with capacity running around 15% above pre-pandemic levels. (£1.00 = US$1.23 at time of publication).