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Demand is being lifted by high levels of employment even with a weaker macroeconomic outlook, he said. Image Credit: REUTERS

Istanbul: Global airlines more than doubled their 2023 industry profit forecast to $9.8 billion from $4.7 billion on Monday cheered by strong travel demand as the sector recovers from the pandemic.

“The pandemic years are behind us and borders are open as normal,” Director General Willie Walsh told the annual meeting of the International Air Transport Association (IATA).

Global airlines have in recent months reported strong results as they prepare for a busy summer season, with travel demand showing no sign of flagging despite peaking inflation.

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Pressure from oil prices has also eased this year.

Revenue levels for 2023 are also inching closer to pre-pandemic levels, climbing to an expected $803 billion versus $838 billion in 2019.

“A lot of people not just have to travel, but want to travel. And they will continue to do so through this year,” Walsh told Reuters in an interview separately.

Demand is being lifted by high levels of employment even with a weaker macroeconomic outlook, he said.

“That tends to give consumers confidence that they can spend money, that they can incur some debt to continue to enjoy what it is they’re doing.”

Challenges continue

Still, Walsh told delegates from some 300 airlines that ongoing challenges, such as supply chain issues and rising airport charges, were dragging down the industry’s recovery.

“OEM suppliers have been far too slow in dealing with supply chain blockages that are both raising costs and limiting our ability to deploy aircraft,” he said.

“Airlines are beyond frustrated. A solution must be found.” Charge increases from Schiphol Airport in the Netherlands and airports in South Africa were also hampering airlines operations, he added.

“I can now confirm that Schiphol Airport has no shame.

After a self-made operational disaster in 2022 the airport continues its three-year 37 per cent charges hike with 12 per cent this year,” Walsh said.

Schiphol did not immediately respond to a Reuters’ request for comment.

The industry’s current low level of profitability was not sustainable, despite a strong rebound in demand, Walsh said, noting the sector was achieving a profit of about $2.25 per passenger, “which is less than the price of a cup of coffee, a subway ticket”.