Airlines worldwide are on their way to near-record high revenues of more than €675 billion this year, as reported by the trade association IATA, which has doubled its profit forecast for 2023 to almost €8,5 billion. DDirector General, Willie Walsh, denied that the rates were excessive despite the improvement in the financial outlook. He said profit margins remained "paper thin" and blamed airline suppliers for rising costs.
After losing $154 billion to the industry in the pandemic years, Walsh said airlines were “moving toward a future that was profitable, safe, efficient and sustainable.” Despite economic uncertainties, people chose to fly, he added, with the most recent data showing passenger traffic down less than 10% compared to 2019.
The International Air Transport Association (IATA) projects annual revenues of €675 billion by 2023 and net profit of €8,23 billion – more than twice the previous December forecast. It expects about 2023 billion people to fly by 4,35, which is about 96% of the last pre-pandemic number from 2019, partly due to China's reopening and continued demand for travel.
Walsh indicated that inflation, including high fuel costs, was to blame for the rising rates, adding: "In real terms, rates are the same as in 2019." Despite the better profit expectations, IATA indicated that the average profit margin was only €1,89 per passenger.
“You can't even buy a subway ticket in New York with that,” Walsh said. The Irish prominent added: “That level of profitability is unsustainable. But when you consider that we lost €2020 per passenger in 64, the speed of the recovery is impressive.”
While the industry expects a quieter year following staff shortages that caused massive delays and cancellations in the UK, Europe and the US last year, Walsh noted: “Challenges remain, cost pressures are intense and in some regions there is a lack of manpower.”
He expressed his belief that airlines and airports had resolved their staffing issues, but there were serious air traffic control concerns, including strikes in France. Walsh noted, “We have already seen capacity cuts imposed on industry in the US… and disruptions in Europe that extend much further than usual this time of year.”
Speaking to delegates at IATA's annual meeting in Istanbul, he criticized business partners, stating, "Unfortunately, many we work with contribute to this pressure." “Manufacturers have been 'far too slow to address supply chain disruptions that both increase costs and limit our capacity to deploy aircraft,'” Walsh said. “Airlines are beyond frustrated.”
He added that there are "glaring examples" of airports "passing on the cost of their inefficiency" to airlines. He mentioned Schiphol and stated that it had surpassed his personal annoyance, Heathrow, as the worst airport in the world.
Schiphol showed no shame, Walsh claimed, by raising airline fares by 12% following a "self-inflicted operational disaster" in 2022. The airport struggled with huge queues last year due to a shortage of security staff.
Walsh reaffirmed the aviation industry's commitment to net zero emissions by 2050, as aviation emissions are increasingly expected to contribute to global warming.
He stated that promoting higher production of sustainable jet fuel (SAF) should be a priority for governments. Despite skeptical reports from scientists and academics who question the feasibility of SAFs, Walsh said, “Decarbonising aviation is a serious multi-trillion dollar initiative… It must be backed by expert research that can withstand detailed scrutiny.”
According to The Guardian, he criticized some of the most prominent recent studies, including a report by the Royal Society, which he said was based on data from an older aircraft that failed to perform a transatlantic flight.
Walsh stated: “I have flown the 737-300 and what I know absolutely for certain is that you cannot get the required amount of fuel into the fuel tanks… If we know that part of the report is nonsense, how much confidence can we have in the rest?”
The International Air Transport Association (IATA) is a worldwide trade association of airlines. Founded in 1945, IATA's purpose is to promote safe, reliable and efficient air transportation services. The IATA also provides resources for the education and training of aviation professionals and sets standards for aspects of international air transportation, including safety and ticketing. The organization represents the interests of approximately 290 airlines – the commercial airlines that carry approximately 82% of total global air traffic.
William "Willie" Walsh is a prominent figure in the aviation industry. Born in Ireland, Walsh began his career as a pilot for Aer Lingus, Ireland's national airline, before eventually becoming CEO of the company. He later played a leading role at British Airways and was the CEO of the International Airlines Group (IAG) – a holding company with several airlines including British Airways, Iberia, Aer Lingus, Vueling and Level. As of April 2021, he serves as Director General of IATA. Walsh is known for his deep industry knowledge, sharp business acumen and his ability to drive significant change in the organizations he leads.