As travel picks up, airlines expect to turn their first profit since 2019
As travel picks up, airlines expect to turn their first profit since 2019
Next year, the global airline industry is expected to turn its first profit since 2019, according to the International Air Transport Association, which is predicting a $4.7 billion net profit in 2023.
While this resurgence in air travel is good news for the industry, the pandemic has changed where those projected profits are coming from. And what’s remarkable about the airline industry’s recovery is who’s fueling it, said Henry Harteveldt, a travel industry analyst at Atmosphere Research Group.
“It has been powered primarily by people traveling on their own dime, because the business travel sector is still very much in recovery mode,” he said.
Harteveldt said his firm has found that before Covid, business travelers made up 50% or more of airline profits. But today, the majority of those profits are coming from leisure travelers.
Meanwhile, airline capacity is shrinking, said Helane Becker, a managing director and senior airline analyst at investment bank and financial services firm Cowen.
“You don’t have the infrastructure in place,” she said. “You don’t have the equipment in place to expand to handle the demand so you have no choice but to raise ticket prices.”
Becker said those rising prices, in turn, may prompt some potential leisure travelers to stay put.
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