Airlines worldwide are on course for near-record revenues of more than $800bn (£645bn) this year, according to the trade body Iata, which doubled its industry profit forecast for 2023 to almost $10bn.

Iata’s director general, Willie Walsh, denied that fares were excessive despite the upgrade in the financial outlook. He said profit margins remained “wafer thin” and blamed airline suppliers for increasing costs.

After industry losses of $183bn in the pandemic years, Walsh said airlines were “en route to a profitable, safe, efficient and sustainable future”.

People were flying despite economic uncertainties, he said, with the latest data showing passenger traffic down by less than 10% on 2019 levels.

Iata is forecasting annual revenues of $803bn in 2023, and net profits of $9.8bn – more than double the previous forecast made in December. It expects 4.35 billion people to fly in 2023, about 96% of the last pre-pandemic figure from 2019, partly driven by the reopening of China as well as the continuing demand for travel.

Walsh said inflation, including high fuel costs, accounted for rising fare prices, adding: “In real terms, fares are flat with where they are in 2019.”

Despite the upgraded profits outlook, Iata said the average profit margin amounted to just $2.25 for each passenger.

“That won’t even buy a subway ticket in New York,” Walsh said, adding: “That level of profitability is not sustainable. But considering we lost $76 per passenger in 2020, the velocity of the recovery is strong.”

Although the industry is expecting a smoother year after the staff shortages that caused widespread delays and cancellations in Britain, Europe and the US last year, Walsh said: “Challenges remain, cost pressure is acute and in some areas labour is in short supply.”

He said he believed airlines and airports had addressed their staffing issues, but that there were serious concerns around air traffic control, including French strikes. Walsh said: “We’ve already seen capacity reductions forced upon the industry in the US … and disruptions in Europe that go well beyond normal this time of year.”

Speaking to delegates at Iata’s annual meeting in Istanbul, he criticised industry partners, saying: “Unfortunately, many of those we do business with are adding to these pressures.”

Manufacturers had been “far too slow in dealing with supply chain blockages that are both raising costs and limiting our ability to deploy aircraft”, Walsh said. “Airlines are beyond frustrated.”

Walsh said oil companies “did very well on our tab”, with jet fuel at “historic highs” until April.

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He added that there were “egregious examples” of airports “shifting the costs of their inefficiency” to airlines. He singled out Amsterdam’s Schiphol, saying it had now overtaken his personal bete noire, Heathrow, as the worst airport in the world.

Schiphol had “no shame”, claimed Walsh, by hiking charges to airlines by 12% after a “self-made operational disaster” in 2022. The airport experienced enormous queues last year because of a lack of security staff.

Walsh reaffirmed the airline industry’s pledge to be net zero by 2050, with aviation emissions otherwise expected to be an increasing contributor to global heating.

He said incentivising greater production of sustainable aviation fuel (SAF) should be a priority for governments. While sceptical reports from scientists and academics have put the feasibility of SAFs in doubt, Walsh said: “Decarbonising aviation is a serious multi-trillion-dollar initiative … It must be informed by expert research that can stand up to scrutiny.”

He attacked some of the most prominent recent research, a Royal Society report, which he said relied on figures using an older plane that could not carry out the transatlantic flight.

Walsh said: “I’ve flown the 737-300 and what I know for certain is you cannot get the fuel they estimated you would require into the fuel tanks … If we know that that section of the report is rubbish, what confidence can we have in the rest?”

Article source: https://airlines.einnews.com/article/637713898/nyR238y-TwJCBQOc?ref=rss&ecode=vaZAu9rk30b8KC5H

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