Strong Demand for Air Travel, up by 39 per cent

The demand for air travel is still growing rapidly, according to traffic figures from May 2023 given by the International Air Transport Association (IATA).

Revenue passenger kilometres, or RPKs, which represent total traffic, increased by 39.1% from May 2022 to May 2023. Traffic is currently 96.1% of May 2019 (pre-pandemic) levels worldwide.

May’s domestic traffic increased 36.4% over the same month last year. Domestic travel overall in May 2023 increased by 5.3% from May 2019 levels. The amount of domestic traffic has surpassed pre-pandemic levels for the second consecutive month.

International traffic increased by 40.9% compared to May 2022, with substantial growth seen across the board, once again driven by carriers in the Asia-Pacific region. International RPKs exceeded pre-pandemic levels on Middle Eastern and North American flights, reaching 90.8% of May 2019 levels.

The overall industry load factor increased to 81.8%, with North American carriers leading the way at 86.3%. In May, there was more positive news. The average load factor for the aircraft reached 81.8%. Markets within the country saw expansion on pre-pandemic levels. International demand also reached 90.8% of pre-pandemic levels as we enter the busy Northern summer travel season, according to IATA Director General Willie Walsh.

May 2023 traffic for Asia-Pacific airlines increased by 156.7% when compared to May 2022, continuing the highly encouraging trend that has been in place since the region’s last remaining travel restrictions were lifted earlier this year. The load factor grew 6.4 percentage points to 80.0% while capacity increased by 136.1 percent.

People love and need to fly. One factor promoting a return to profitability for airlines is the high demand for travel. We anticipate a $9.8 billion net profit for airlines worldwide in 2023. It’s a significant figure, especially in light of the devastating epidemic losses. However, the average net profit margin is only 1.2%, or $2.25, for each departing passenger. That is not a long-term return that can be sustained.

In addition, it seems that while the pandemic revolutionised many aspects of aviation, it did not balance the industry’s infamously imbalanced value chain. The most recent sign was last week’s announcement by European airports of a combined profit of EUR 6.4 billion ($7 billion) in 2022. IATA estimates that for the same year, European airlines had a $4.1 billion profit. We don’t object to any company making well-deserved profits. But this does bring up a fascinating query. Is airport economic regulation protecting the public interest successfully when a monopoly supplier (airports) can produce profits that appear to be significantly higher than those of the rival companies (airlines) they supply? Governments ought to at least look, according to Walsh.


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