The International Air Transport Association (Iata) has communicated that airline chief financial officers and heads of cargo surveyed over the period December 2021 and January 2022 have reported that pressure on the profitability of their companies had reduced during the fourth quarter of last year. Both passenger and cargo volumes rose during this period. These findings were amongst those released in Iata’s January 2022 Survey: Airline Business Confidence Index.    

Of the respondents to the survey, 83% reported that their airlines had recorded increased profits or at least reduced losses, in comparison to the last quarter of 2020. In Iata’s previous such survey, released in October, and covering last year’s third quarter, this proportion had been pretty much the same, at 85% (again, in a year-on-year comparison). Some airlines did, however, report reduced profits (or greater losses).

“The improvement remained driven by the gradual recovery in passenger traffic as travel restrictions were eased, and by strong cargo demand combined with elevated cargo yields,” explained Iata. “Those who reported a deterioration mentioned the increase in the jet fuel price and Covid outbreaks in key markets.”

Indeed, the outbreak of the Omicron variant of Covid-19 and the rising jet fuel price had resulted in increased caution among the surveyed executives. Whereas in Iata’s previous survey 74% expected higher incomes during this year, that figure had dropped to 59% in the current survey. And the proportion of those who expected to see no change in their incomes this year had risen from 24% to 34%.

The survey also confirmed that air passenger demand was up, almost across the board. No less than 96% of the respondents reported increased numbers of passengers during 2021’s last quarter, in comparison to the same period in 2020. The equivalent figure in the October survey had been 86%, and in the survey before that (published in July 2021), 81%. Further, 91% of those surveyed in the latest report expected that the recovery in air passenger traffic would continue during this year, despite Omicron, as travel restrictions were lifted and more efficient pandemic containment methods adopted.

With regard to air cargo, 71% reported increased demand during the last quarter, again in year-on-year terms, while 21% reported no difference. Those who experienced greater demand benefitted from it being peak season and from supply chain congestion in the shipping sector. The recovery in passenger demand also meant that there was increased available capacity provided by airliner belly cargo holds. As for the coming year, 64% expected even greater cargo demand, while 29% thought there would be no change (the sector already being in a very strong position).

Input costs were a concern. Of the respondents, 55% reported increased input costs in year-on-year terms; in the October survey, this figure had been 47%. The cost increases had been driven by increasing jet fuel prices, inflation and staff shortages. However, 41% of respondents reported that their input costs had decreased. For the coming year, 55% expected input costs to increase, with the main concerns being jet fuel prices and inflation.

Regarding employment, 31% of airlines reported recruiting more staff, but another 31% stated that they had cut staff (again, in year-on-year terms). But 59% expected to hire more staff during this year, largely because of increases in air passenger traffic.