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RIYADH: Aviation won’t reach pre-pandemic levels of profitability of $26.4 billion anytime soon because we don’t really see gross domestic product growth accelerating but, according to the chief economist of the International Air Transport Association Marie Thomsen, the industry will begin to see profits in 2023.
Global airlines are now expected to post a loss of $9.7 billion in 2022, an improvement from a revised loss of $42.1 billion in 2021.

The forecast for 2022 is nearly $2 billion higher than an earlier forecast of an $11.6 billion loss.

fallout from COVID-19
At IATA’s annual general meeting in Doha, Thomsen told Arab News that the scale of COVID-19 “makes all previous crises look like a mild cold.”

Despite China’s zero COVID-19 policy affecting the aviation industry, she thinks the policy could be changed.

Thomsen explained that the virus has evolved, and although it has infectious variants, they are less lethal. In itself, the progression of the virus argues for fewer and fewer travel restrictions, she added.

She said that while airlines were thriving, they would still feel the effects of the COVID crisis for decades.

HIGHLIGHTS

Global airlines are now expected to post a loss of $9.7 billion in 2022, an improvement from a revised loss of $42.1 billion in 2021.

The forecast for 2022 is nearly $2 billion higher than an earlier forecast of an $11.6 billion loss.

unpredictable future
The risks are unpredictable and she doesn’t know how long the war in Europe will last or what will happen to oil prices, Thomsen said. “But, nevertheless, barring unexpected events, it should be possible for the industry as a whole to post profits next year,” she added.

According to Thomsen, prices continue to fall for consumers, and this is in the interest of the global economy since connectivity is one of the main drivers of economic growth.

Regarding aviation concerns, Thomsen described the regulatory environment that airlines are most concerned about as “unstable” and “fragmented.”

“The reduction in global connectivity not only hurts airlines and their customers, but also global economic output,” she said.

Marie Thomsen, chief economist of the International Air Transport Association

Aviation in the spotlight
Several forms of connectivity are critical to the global economy, Thomsen said, and aviation is one of them.

“Aviation is not opposed to other modes of transport; all modes of transport are essential to the global economy,” she added.

Although not a government agency, IATA tries to support airlines with analysis and research even if it cannot provide funds, she said.

According to Thomsen, governments seem to see airlines as a honeypot that the industry can tap into and profit from. “That’s obviously a misconception based on our numbers; there is no honey in the jar,” she said.

As a result, the government could work up the airline value chain to introduce more competition if it had a different attitude towards them, she added.

“If you have oligopolistic structures here and hypercompetitive structures here, obviously it’s not aligned,” Thomsen said.

She concluded that in her opinion, the main problem with the aviation industry is that it has a skewed value chain.

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