The global airline industry has more than doubled its profit forecast for this year, with the sector’s trade body predicting net profits will rise to $9.8b on the back of a travel boom that has lifted carriers’ recent results. The sector has benefited from a resurgence in post-pandemic demand which has boosted both passenger numbers as well as freight at a time when fleet growth has been constrained by production difficulties at Boeing and Airbus. The forecast from the International Air Transport Association compares with net losses for the industry of $3.6b in 2022 and the trade association’s forecast in December of $4.7b in net profits for this year. Iata projected revenues for 2023 to rise 9.7% to $803b, topping the $800b mark for the first time since the pandemic forced carriers to slash capacity, leading to industry-wide losses. The organisation gave a particularly strong forecast for North American airlines, predicting that revenue passenger kilometres (RPKs) in the region would be 2% above the levels in 2019. RPKs measure the number of passengers carried multiplied by the distance each was carried. Worldwide, Iata predicted RPKs would reach 87.8% of the 2019 level. Willie Walsh, Iata’s DG, said that airline financial performance for the year was beating expectations, with stronger profitability supported by “several positive developments”. “China lifted Covid-19 restrictions earlier in the year than anticipated,” said Walsh, adding that cargo revenues remained above pre-pandemic levels although volumes had not. The improved profit outlook partly reflects Iata’s projection that costs will rise 8.1% compared with 2022, more slowly than projected revenues. “On the cost side, there is some relief,” added Walsh. “Jet fuel prices, although still high, have moderated over the first half of the year.” Leisure travel has rebounded far faster for most airlines than the business market, traditionally a strong driver of industry profits. Iata predicted passenger revenues for the industry in 2023 would be $546b, 27% up on 2022 levels but still 10% below the level reached in 2019. Walsh said there were many good reasons for optimism.<br/>
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Air travel will be affected by “very frustrating” supply chain issues this year, according to Willie Walsh, DG of the IATA, as he discussed the challenges facing the aviation sector this year. ″[It’s] so frustrating, because it is going to have an impact in summer 2023. And we’re already seeing that,” Walsh told CNBC’s Dan Murphy. Shortages will be particularly noticeable when it comes to engine parts, he added, which could then delay the delivery of new aircraft from manufacturers like Boeing and Airbus. A shortage of planes has been a thorn in the side of US airlines for months, with some now turning to bigger aircraft to accommodate more passengers as they try to balance strong travel demand with a lack of resources. A scarcity of air traffic control staff is also likely to be a problem in 2023, Walsh said. “The challenges we expect to see in the short term are outside of our control, and they principally relate to shortages, in resources in air traffic control,” Walsh said. “We’ve already seen restrictions on capacity in the United States [and] we’re seeing problems in Europe.” His comments come as airlines look set to return to profitability in 2023, having navigated a challenging post-pandemic period, with airports also scrambling to get back on their feet. “Airlines and airports were criticized last year for not getting resources in place in time for the recovery,” Walsh told CNBC. ”[But] I think the airlines have done their bit. Most airports I think are in good shape,” he added.<br/>
Airfares globally have remained flat in real terms compared with 2019, IATA head Willie Walsh said on Monday, as carriers around the world have hiked their prices for airline tickets. Taxes and charges in some jurisdictions have added 33% to the price of tickets globally, according to IATA’s calculations, Walsh added. Inflation, jet fuel prices and supply chain issues have all been blamed for the hike in costs passed down to the consumer. <br/>
Aircraft maintenance and delivery delays are one of the hot topics as this year’s IATA AGM, with the CEs of three carriers tackling the issue on the event’s set-piece panel. Unfortunately for airlines, the issues appear to be getting worse, and are in some cases prompting desperate measures to keep aircraft in the air. “As recently as a few months ago we took delivery of some brand-new A321s for our domestic business and literally, within a few minutes of them landing, we were taking parts of those planes in order to keep some other ones operational,” says Air New Zealand CE Greg Foran. “We keep a close watch on the number of parts we are robbing off a plane to go and put on another, and they are running about double what they were traditionally, and it’s across the entire supply chain,” he adds. 'Air India CE Campell Wilson also cites “an absence of new parts” for aircraft – a significant challenge for an airline that recently needed to source 30,000 spares to get 13 Boeing 787s back into the air. They had been grounded “for many years”, Wilson says, and were used as a source of spares “as a consequence of Air India not having the funds to pay for spare parts”. Wilson says he is particularly unhappy with delays to the delivery of new aircraft, “because there is a market opportunity that is smacking us in the face and it is there for the taking, and to be sitting on assets and people that are undertapped [is] very frustrating”. RwandAir CE Yvonne Makolo concurs that maintenance delays have become a “major issue”, saying they are felt particularly acutely by smaller carriers who do not have the fleet flexibility available to larger operators. “Getting parts is becoming more and more difficult, our AOGs [aircraft on ground] are lasting longer, and even when you get the parts you get them at a premium as well, so the operating costs shoot up,” she states.<br/>
IATA has upgraded the severity of the risks posed by supply-demand imbalances in its latest industry forecast, as factors such as aircraft delivery delays weigh on the airline sector. “We have changed our mind a bit on the supply-demand imbalances, which we think are impacting more and for longer than we were hoping,” said IATA chief economist Marie Owens Thomsen at the association’s AGM in Istanbul on 5 June. She repeats a “very good expression” of the imbalances that she heard from an industry stakeholder: “When aircraft are delivered six months late that is considered to be on time.” The supply-chain problems behind such delays reflect the fact that “it was so much easier to turn the global economy off than it was to turn it back on again”, Owens Thomsen suggests. And the constraints go beyond aircraft, to include factors such as ATC capacity restrictions caused by a lack of staff. “We have various constraints in all kinds of domains, not only supply of aircraft and parts but even in terms of the airspace, we are constrained,” she says. That means airlines must be “aware, alert and agile” in handling the associated challenges, Owens Thomsen states. Supply constraints are a hot topic at the AGM, with most airline chief executives complaining of worsening aircraft maintenance and delivery delays. Despite such issues, IATA expects the airline industry to make a net profit of $9.8b this year, a doubling of its initial projection for sector profitability.<br/>
Airlines took aim at Europe over green fuel mandates and its failures to stem France's air traffic control strikes as they weigh on carrier capacities at a global airlines meeting in Istanbul on Monday. European regulators have introduced a new mandate demanding airlines use sustainable aviation fuel (SAF), an alternative to jet fuel that produces fewer carbon emissions but is between two to four times more expensive than its traditional alternative. New rules will require fuel suppliers to ensure they can make 2% of fuel available at EU airports SAF by 2025, rising to 6% in 2030, 20% in 2035 and gradually to 70% in 2050. "I think it's fair to portray the EU as being anti-aviation, whereas other parts of the world are very positive, pro-aviation," IATA head Willie Walsh said on Monday at the group's annual meeting. Officials lambasted Europe for introducing a mandate, arguing that a global approach to increasing SAF production or tax incentives like those introduced by the United States under the Inflation Reduction Act would be more effective. EU officials have said they are also helping to support the industry in its green transition through credits and other benefits and that the timelines for the mandates were reasonable. In 2021, the body released its strategy to achieve net-zero carbon emissions by 2050, including a progressive increase in sustainable aviation fuel use. During its annual meeting this week, IATA highlighted its roadmap to that goal, which will include a tool to track the amount of SAF airlines are purchasing and using in order to facilitate accountability across the sector.<br/>
Arrivals and departures to Pittsburgh International Airport were briefly halted Monday after reports of an unauthorized drone flying on the north side of the airfield. The US FAA lifted the restrictions about 1 p.m. local time, roughly an hour and 20 minutes after they were imposed, according to an air-traffic bulletin and an agency statement. Operating even small drones near commercial airports is prohibited without approval from FAA controllers because of the risks of a midair collision. Local police were attempting to locate the operator of the device, the FAA said. While rare, drone sightings near airports have caused major concerns and led to severe flight disruptions. In 2018, drone activity created dayslong halts to flights at London’s Gatwick Airport. Dozens of flights were delayed at Newark Liberty International Airport in 2019 after an apparent near-collision between and airliner and a drone.<br/>
Flight cancellations remain a possibility over the coming days as airlines continue to monitor the impact of a 36-hour strike by French air traffic controllers due to start on Monday evening. Aer Lingus has said it expects to operate a full schedule of flights over the rest of the bank holiday, while Ryanair has warned of the potential for delays and cancellations across Europe as a result of the action which is scheduled to go on until Wednesday morning. As of Monday afternoon, however, just one of about 600 flights scheduled to arrive into or depart from Dublin Airport, Ryanair’s from Bordeaux, due to land before 1am, was listed as a cancellation on the DAA website. A spokesman for DAA, however, said the airport operator was advising “all passengers to stay in contact with their airline if their flight is due to fly through French air traffic control space in the coming days”.<br/>
With travel between Asia and Europe booming the closure of Russian airspace is hobbling Western airlines while proving a boon for those from non-aligned nations not subject to Moscow's wrath. For airlines on Russia's airspace blacklist, avoiding the country which straddles 11 time zones in Europe and Asia is an expensive proposition. Travelling around Russia implies larger distances and longer flight times. A Paris-Beijing flight path over Russia is some 8,400 kilometres (5,200 miles) while skirting Russia to the south is 9,800 kilometres, according to data from the Flightradar24 website. That translates into two hours of additional flight time. Between added expenditure on fuel and staff, "this costs much more," Air France-KLM's CE Benjamin Smith told AFP. "It's a big issue for us," he added. And it is an even bigger issue for Finnair as it has based its long-haul strategy on serving as an air bridge between Europe and Asia crossing Russian airspace. "If you're Finnair, you had a large number of widebodies that were purchased in anticipation to serve a market, origin and destination pairs between Asia, Europe and North America," said Vik Krishnan, a partner at the McKinsey consultancy. "Your calculus is quite different than if you're Lufthansa or Air France-KLM or British Airways," Krishnan added.<br/>
Hong Kong faces a “difficult and challenging” task in rebuilding its role as an aviation hub, while the city’s flag carrier Cathay Pacific Airways is expected to operate at only 60% of its pre-pandemic capacity by the end of the year, the head of a global airline association has said.<br/>But the outlook for the industry as a whole was positive, DG of the IATA Willie Walsh told its annual meeting in Istanbul on Monday, predicting global profits would reach US$9.8b this year, double its forecast in December, on the back of stronger demand for travel. Walsh told the Post last December he did not expect Hong Kong would fully regain its status as an aviation hub before 2028, pointing to “structural changes” in the city following three years of Covid-19 travel restrictions. Asked again about his earlier comments, Walsh admitted his timeline was based on a “feeling” about where Hong Kong was in the recovery process compared with rivals. “It is rebuilding, but I think it has lost an awful lot of ground and that lost ground is going to take time to recover,” he said, adding it was going to be a “very difficult and challenging task”. Cathay faced a complex process in rebuilding its international network, Walsh argued. “I think Cathay will be operating at 60% capacity this year as they retrain pilots, many of whom have not flown in the past two years,” he said.<br/>
The number of flight passengers using Korean flag air carriers rose nearly 24% in May from a year earlier amid a nationwide move to return to pre-pandemic normalcy, government data showed Tuesday. Korean airlines carried a total of 9.32m people on international and domestic routes last month, up 23.8% from 7.54m tallied a year ago, according to the data compiled by the Ministry of Land, Infrastructure and Transport. International passengers soared more than sixfold to 3.6m in May from the previous year's 556,000, while air passengers on domestic routes declined 18% on-year to 5.73m from 6.98m over the cited period. The monthly figure also accounted for 85.8% of 10.88m tallied in May 2019, before the outbreak of the COVID-19 pandemic. The sharp on-year increase came as local air carriers have resumed international flights to meet pent-up travel demand in the midst of lifted COVID-19 restrictions.<br/>
The Philippines’ transport department plans to seek an operator to upgrade and maintain the capital’s congested main airport, the Philippine Star reported. The Department of Transportation and the Manila International Airport Authority are seeking approval from the National Economic and Development Board led by President Ferdinand Marcos Jr. for such a proposal, the paper reported Sunday. Private firms will be invited to submit plans on the upgrade of the airport’s air traffic control systems and other facilities, according to the report. The winning bidder will then have 15 years to operate the airport and recoup its investments, the paper said. The government is prepared to process all proposals based on public-private partnership law, the Star quoted Transport Secretary Jaime Bautista as saying, dismissing speculation an unsolicited proposal filed earlier this year by six of the country’s biggest conglomerates will be rejected. <br/>