According to IATA, Air Cargo is expected to enjoy its second best year in 2022
The International Air Transport Association (IATA) says strong cargo demand and passenger recovery could make the global airline industry profitable in 2023.
While the air cargo business is slowing amid global macroeconomic pressures, 2022 is shaping up as one of the industry’s strongest years ever, posting cargo revenues nearly double those pre-Covid.
The cargo forecast was part of an upgraded outlook showing that the industry is inching closer to profitability in 2023 as passenger demand finally kicks into full gear.
IATA projects volumes to rise this year even as cargo yield moderates with the additional belly capacity from passenger aircraft returning to service.
“Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty,” said IATA director general Willie Walsh.
It is a time for optimism, even if there are still challenges on costs, particularly fuel, and some lingering restrictions in a few key markets,” said Mr Walsh in opening remarks to the group’s annual general meeting in Doha, Qatar.
Cargo revenues are expected to tally US$191 billion, a 6.4 per cent reduction from 2021’s peak of $204 billion and nearly twice the $100 billion achieved in 2019.
Air freight will account for 24.4 per cent of total passenger and cargo airline sales, IATA estimated. With passenger traffic slashed by Covid scare, cargo represented 36.2 percent and 40.3 percent of airline revenues in 2020 and 2021, respectively, compared to about 12 per cent in the preceding four years.
Airlines are projected to carry more than 75 million tons this year, which would represent a record high. But growth has flattened on a seasonally adjusted basis – albeit at near-record high volumes. Nonetheless, IATA projects air cargo volumes to be 11.7 per cent above the pre-pandemic level following red-hot 2021 growth of 6.9 per cent versus 2019.
IATA estimates global GDP is now poised to grow about 3.4 per cent this year, down from four per cent to 4.5 per cent prior to Russia’s invasion of Ukraine. The US and European Union economies contracted by a fraction of a point in the first quarter and China’s second quarter output will be heavily impacted by the extensive lockdowns imposed in April and May.
Russia’s ban on overflights in response to 40 nations closing their airspace to Russian aircraft means higher fuel costs for carriers that now must detour around Russia on Asia-Europe and Asia-North America routes. The extra transit time and need to carry extra fuel has reduced aircraft utilisation for cargo by about 20 per cent, according to aviation experts.
Marie Owens Thomsen, IATA’s chief economist, last month estimated a 20 per cent chance for a recession next year, but said economic activity and air cargo would still be relatively solid in 2022.