High fares, rising economic worries could weigh on airline recovery

Pent-up demand from the pandemic means consumers are weathering high airfares, but as summer ends and inflation and interest rate rises begin to bite, there are growing questions over whether the appetite for travel is sustainable. Global airlines are now expected to post a $9.7b loss in 2022, a sharp improvement from a revised $42.1b loss in 2021, the IATA said on Monday, and to possibly claw their way back to profit in 2023. But earnings remain well short of pre-pandemic levels as highly indebted carriers grapple with fresh challenges from rising fuel costs and high wages bills that they are attempting to pass on to consumers in the form of higher fares. "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." Industry leaders gathering at IATA's annual meeting in Doha said bookings generally looked very strong for the next few months, but there was less certainty beyond that. "The demand is pent up. It is revenge travel," Malaysia Airlines CE 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."<br/>