Aviation must prioritize net-zero emissions post-pandemic

December 1st 2022

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In 2023, global airlines are headed for a collective profit of $4.7 billion, the International Air Transport Association (IATA) has forecast. Read More » After three years of horrendous losses from the pandemic, at close to $190 billion, the positive forward analysis is welcome, although the profit margin will be a slim 0.6%, or a meagre $1.11 net profit per passenger carried.

Unfortunately, the Asia-Pacific outlook for airlines remains largely depressed compared with elsewhere in the world, particularly North America. IATA forecasts Asia-Pacific airlines will stay stuck in the red in 2023 to the tune of $6.6 billion. They will record a collective $10 billion loss this year. We all know why the Asia-Pacific is the laggard in the recovery. China’s restrictions on international traffic, although relaxed to a degree at press time, are blunting the speed of regional recovery.

Historically high fuel prices, while lower in recent weeks, also are a pressure on operating costs for some carriers.

Many airlines in the region continue to post losses from the pandemic, but the picture is mixed. Some remarkable performances have been achieved. In November, Singapore Airlines (SIA) posted the highest half-year and quarterly operating profits in its history, a record US$890 million half-year result and a $491.6 million quarterly operating profit.

Qantas Group has upgraded its profit forecast for interim 2022-2023 on the back of “continued strength” in travel demand. It expects to report an underlying profit for the six months in the range of US$897 million-US$964 million. These results are spectacular given the financial pain of the past three years. They show, once again, that airlines with good management, good business practices and the capacity to re-engineer their businesses will emerge from any crisis better prepared for growth.

It should be noted that while the pandemic hurt the industry, it also brought benefits, forcing airlines to increase digitalization and be more innovative and efficient in every sector of their operations.

From now on, part of that re-engineering must include decarbonization – the biggest challenge ahead for aviation. The pace must quicken to meet the net-zero emissions by 2050 target, Airbus CEO, Guillaume Faury, said at the OEM’s recent annual summit. “Is the aerospace industry on track to meet its target? I think the reality is not yet,” he said.

IATA director general, Willie Walsh, believes many airlines will be sufficiently profitable to attract the capital needed to drive the industry forward in decarbonizing.

But several airlines in the Asia-Pacific are barely surviving let alone being able to attract funding for investment in emissions reduction programs, he said at IATA’s media days earlier this month. They face onerous regulation, high costs, inconsistent government policies, inefficient infrastructure and a value chain where the rewards of connecting the world are not equitably distributed, he said.

So the bottom line is light at the end of the tunnel for some airlines in 2023, but global progress towards solving the industry’s biggest ever challenge, mitigating climate change by radically reducing emissions, is still falling short.

TOM BALLANTYNE
Associate editor and chief correspondent
Orient Aviation Media Group