Confidence in the US Market Remains
Positive comments from senior management of industry groups appeared during the balance of the bonanza of results of European airlines at the end of October this year, beside the great flow of pilots’ job offers generated by airlines in US, which are constantly growing and have been successfully managed by Brookfield Aviation. Leave as a premise that leisure and visits to the territory by friends and family, establish that possibly one summer is not enough to release all the repressed demand that has accumulated during the pandemic in the United States of America.
These comments support the theory as to why many parts of the airline industry hold high hopes for 2023, even considering the global economic and geopolitical hurdles.
Markets have been buoyed by a third quarter that was often defined by high fares as capacity struggled to keep up with resurgent travel demand, more than offsetting factors such as inflation and high fuel costs.
In many cases, those impressive returns were also enough to offset costs related to high-profile operational disruption at many airports during the July-September period.
Some companies, for example, have expressed a healthy contribution to overall operating profit, despite ongoing staffing challenges, which continue to grow according to company need.
Indeed, after two years of balance sheet pain, carriers in Europe and North America were able to cite revenue and profit figures that were, in some cases, above 2019 levels.
Most airline CEOs expect useful demand dynamics to continue through 2023.
Global airline capacity is expected to be constrained for some time, by factors including staff shortages, aircraft delivery delays and barriers to market entry created by higher costs.
That will potentially bring some discipline to an industry that was often accused of adding too much capacity in earlier times.
However, if we look at it in contrast, China continues to lag behind in recovery progress.
The country's three largest airlines fell further into the red in the third quarter as China's "covid zero" strategy meant drawbacks such as rising fuel costs could not be offset.
China has signaled its intention to continue with the strategy for the foreseeable future, meaning its huge domestic travel market will likely be disrupted for some time, and international markets will remain severely depressed.