Buoyed by sharp demand for international travel, Middle East airlines will become profitable next year, according to the latest IATA forecasts. Region-wide losses for these airlines this year will dip to $1.9 billion from $4.7 billion loss in 2021. Air travel demand – measured in revenue passenger kilometres (RPKs) – is expected to reach around 79 per cent of pre-Covid levels.
“CEOs in the region are very positive about their financial performance, so I don’t see any reason why this region won’t be profitable in 2023,” said Willie Walsh, Director-General of the International Air Transport Association during a media briefing in the Qatari capital. Qatar Airways, one of the Gulf’s largest carriers, reported a profit of $1.5 billion for 2021, compared to a year ago loss of $4.1 billion. Emirates airline, the world’s largest long-haul carrier, is expected to return to profitability in 2023.
Walsh does not see growth getting derailed by another wave of restrictions. “We won’t see closures to the same extent because a lot of governments have recognized that closing the border has no benefit,” said Walsh. “The data is clear, (the restrictions) didn’t stop the virus from spreading, and in many cases, the border was closed after the virus was widespread in the country. The economic cost of closing the border was so high that I don’t think there’ll be an appetite for governments to incur that cost.”
Following the relaxation of curbs earlier this year, travel has taken-off in a major way, but the surge in oil prices to over $100 a barrel has emerged as a major concern for airlines. The IATA chief is confident that carriers will be able to make money even with high fuel prices. Depending on the type of fleet, fuel can represent around 25-40 per cent of an airline’s fixed expenses.
