Worldwide, airline CFOs and Heads of Cargo are displaying strong optimism regarding profits and air passenger and cargo demand. This is the outcome of a survey by the sector’s global representative body, the International Air Transport Association (Iata), conducted in mid-October and published in the association’s Airline Business Confidence Index: October 2021 Survey.

Regarding profitability, the improving trend, previously noted by Iata, continued during the three months covered by the new survey. Of the respondents, 85% reported that either their profits had increased or that their losses had reduced. In the July 2021 survey, the equivalent figure had been 72%. The driving forces behind this trend were strong cargo traffic, and rebounding passenger revenues (off a very low base) resulting from reduced travel restrictions.

“Optimism remained strong regarding profits, as 74% of surveyed airlines expected an improving bottom line for the next twelve months,” stated the index report. “This is unchanged from the July survey, and suggests that the upward trend in actual profitability may continue. Moreover, several of the airlines that expect no-changes do so because they already are in a strong position.”

Regarding passenger demand, 86% of the surveyed airlines reported year-on-year increases during this year’s third quarter (Q3). The equivalent figure during the second quarter (Q2) of 2021 had been 82%. On the other hand, 14% reported a decline in passenger demand during Q3 2021, due to reintroduced travel restrictions, aimed at countering the Covid-19 Delta variant. As in the Q2 2021 survey, a “wide majority” of respondents expected air passenger demand to continue to grow over the next 12 months, as travel restrictions continued to be reduced and more routes reopened.

“Turning to air cargo demand, the wide majority (74%) of respondents reported growing volumes in Q3 2021 compared to Q3 2020, although industry-wide results indicate that a large part of the improvement probably happened in late-2020 and early 2021,” noted the report. “Respondents pointed out a shift to more air cargo to compensate for the lack of passenger traffic, and the transport of medical equipment and vaccines, as supportive forces. ... 73% of surveyed airlines expect air cargo volumes to continue trending upward in the next twelve months, the largest share since 2010.”

However, only 47% of responding airlines expect to increase the size of their workforces over the next 12 months. While only 6% expect to further cut employee numbers, another 47% expect to keep their staff complements at their current levels (which are significantly smaller than before the Covid-19 pandemic).

Further, 47% of the surveyed airlines reported rising input costs, especially fuel costs but also rising labour costs and supplier costs. And 44% expected fuel costs and inflation to continue to increase over the next year, in comparison to the 30% figure recorded in the July survey. In addition, while 46% of respondents in the July survey expected these costs to fall over the next twelve months, in the latest survey this proportion had fallen to 26%.