Lessor Avolon says the aviation industry is set to "thrive" in 2023 with commercial traffic on track to return to pre-pandemic levels by mid-year.
"After a 70% recovery in passenger traffic last year led by recovery in Europe and North America, Asia will drive growth in 2023," Avolon said, in an industry outlook published ahead of the opening of the Airline Economics Growth Frontiers Dublin conference on January 16 2023.
Key to the recovery will be China reopening its doors, according Jim Morrison, chief risk officer, and Rosemarie O'Leary, head of counterparty risk and sustainability, who co-authored Avolon's 'Climb to Cruise' report.
"Demand for travel is no longer the constraint to recovery, but airlines’ capacity to put planes in the air," Avolon said, projecting increasing demand for used widebody aircraft to meet demand.
Part of the capacity constraints have arisen in part as manufacturers suffer "delivery delays" after the pandemic-era resulted in "lost production" amounting to 2,400 planes.
In turn, while airlines' fleets have shrunk, lessors have expanded to the point they manage more than half the world's passenger fleet, measured by value.
"Aviation markets are adjusting to higher interest rates, and lease rates are increasing, creating opportunities for well capitalised investment grade lessors," Avolon said.
“Aviation has demonstrated its resilience and is ready to thrive having come through a pandemic-driven two-thirds drop in traffic. Airlines, manufacturers, and lessors share an ecosystem that creates opportunities for all but requires collaboration to overcome key challenges including a higher interest rate environment, limited aircraft availability and the need to make further progress on decarbonisation goals," said chief executive Andy Cronin.
The report also projected a doubling of sustainable aviation fuel production in 2023 as well as a "consolidation" among airlines after the launch of 100 new carriers over the past three years.