The International Air Transport Association (IATA) has predicted in its latest report that the Asia-Pacific, Middle East, and Africa carriers to be in red but expects to return to profitability by 2023. According to the report, Asia-Pacific carriers are expected to post a loss of $10.0bn in 2022, narrowing to a $6.6bn loss in 2023. In 2023, passenger demand growth of 59.8% is expected to outpace capacity growth of 47.8%. Over the year, the region is expected to serve 70.8% of pre-crisis demand levels with 75.5% of pre-crisis capacity.
The overall Asia-Pacific recovery is hampered by China’s zero-COVID policies on travel and the region’s losses are largely skewed by the performance of China’s airlines that face the full impact of this policy in both domestic and international markets.
Taking a conservative view of the progressive easing of restrictions in China over the second half of 2023, the report predicts 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.
Similarly, the report forecasts Middle East carriers to post a loss of $1.1bn in 2022, and a profit of $268 million in 2023. In 2023, passenger demand growth of 23.4% is expected to outpace capacity growth of 21.2%. Over the year, the region is expected to serve 97.8% of pre-crisis demand levels with 94.5% of pre-crisis capacity.
The region has benefitted from a certain degree of re-routing resulting from the war in Ukraine, and more significantly so from the pent-up travel demand using the region’s extensive global networks as international travel markets re-opened.
Willie Walsh, IATA’s Director General said: “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.”
Going ahead, the report paints a complex picture for African carriers due to macroeconomic headwinds leading to the increased vulnerability of several economies. African carriers are expected to post a loss of $638 million in 2022, narrowing to a loss of $213 million in 2023. Passenger demand growth of 27.4% is expected to outpace capacity growth of 21.9%. Over the year, the region is expected to serve 86.3% of pre-crisis demand levels with 83.9% of pre-crisis capacity.