While travel is rebounding, 2023 could prove challenging for airlines: reports

A travel rebound is being forecast for the world’s airline industry in 2023, but challenges remain such as uncertainty over the economy and a shortage of pilots. Airlines are expected to benefit from the pattern of consumers returning to the skies as post-Covid-19 travel demand continues to pick up, aided by China’s loosening of flight restrictions in January, according to credit rating agency DBRS Morningstar. “On the other hand, the sector is highly sensitive to any macroeconomic downturn and declining consumer purchasing power. Considering these factors, we expect sector performance to remain strong during the first half of 2023, but the second half could be challenging,” said DBRS Morningstar in its 2023 outlook for the global airline industry. The IATA, a group that represents global carriers such as Air Canada and WestJet, is forecasting a profit of US$4.7b this year in the sector. That would mark the first annual profit since 2019, which saw a US$26.4b profit. However, any profit would be a sharp contrast to the string of losses during the pandemic, notably red ink of US$137.7b in 2020, a US$42b loss in 2021, and a projected loss of US$6.9b in 2022. “Even with changing patterns in the corporate world, such as a shift to hybrid working models and more in-person events, corporate travel is expected to recover in 2023, although we do not expect it to reach pre-pandemic levels any time soon,” said DBRS Morningstar. “The air cargo segment, which provided great support to sector revenues during the pandemic, has already started to normalize in 2022 with volumes back to pre-pandemic levels.” <br/>