2023 will be profitable for airlines, despite airports “gouging” airlines

Airline trade group IATA – the International Air Transport Association – is hosting a gathering of journalists in Geneva, Switzerland this week and laying out a wide variety of reports, predictions, and challenges.

IATA reports that in 2023, as air travel rebounds from COVID-19 restrictions, the global airline industry expects to post a small net profit of $4.7 billion, with more than 4 billion passengers taking to the skies. That’s a 0.6% net profit margin and the industry’s first profit since 2019.

In 2021 and 2022 airlines lost billions of dollars due to the pandemic.

The 2023 return to profit is a “great achievement considering the scale of the financial and economic damage caused by government-imposed pandemic restrictions,” said IATA Director General Willie Walsh. But he warned that many airlines will continue to struggle next year and into the future.

And he lashed out at airports – and their charges to airlines – as adding to the struggle.

“It’s very important that everybody understands just how fragile the recovery is,” said Walsh. “But the margins we are operating with are very small and we cannot tolerate a situation where airports in particular attempt to gouge airlines and their passengers by significant increases in airport charges. Every single cent matters.”

The Airport Industry Responds

As you might imagine, Walsh’s comments about airports don’t sit well with the airport community.

And Luis Felipe de Oliveira, the World Director General of airport trade group Airports Council International (ACI) swiftly responded to Walsh’s comments about airports and airport charges.

“Attacking industry partners does not reflect the collaborative spirit the industry needs for the common goal of providing safe, reliable, and efficient air transport,” said de Oliveira.

“Like airlines and other areas of this ecosystem, airports are businesses too and affected by cost rises in the industry outside of their control. It is a reality we’re all facing—high costs of energy, inflation, and staff shortages.”

de Oliveira noted that airports had a 49% drop in aeronautical revenues during 2020-2021. Costs have gone up, he said, while revenues are not keeping pace.

“It is important to remember that airports are infrastructure-intensive businesses—meaning they have unavoidable high fixed costs. What’s more, significant investment will be needed going forward to meet demand and transition to sustainable energy sources,” said Oliveira. “Airlines have been able to increase their tariffs during the last year, which is different from the airports that need to follow regulatory frameworks.”

In the end, “aviation is one ecosystem,” said Oliveira. “We must focus on the benefits to passengers and communities. And for this, all parts of the ecosystem need to be healthy.”

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