Demand for air travel nearing pre-Covid levels

Air travel figures released this week show demand nearing prepandemic levels.

International Air Transport Association (Iata) data for November shows air travel demand at 99.1 per cent of 2019 levels.

Total traffic in November (measured in revenue passenger kilometres or RPKs) rose 29.7 per cent compared to November 2022.

International traffic rose by 26.4 per cent.

The Asia-Pacific region continued to report the strongest year-over-year results (63.8 per cent), and all regions showed improvement compared to the previous year.

At Auckland Airport, international capacity is 93 per cent of pre-pandemic levels, a long way from the depths of the Covid crisis when on May 25, 2020, there were no international passengers at all.

Iata figures show total November 2023 domestic traffic was 6.7 per cent above the November 2019 level.

“We are moving ever closer to surpassing the 2019 peak year for air travel,’' association director general Willie Walsh said.

“Economic headwinds are not deterring people from taking to the skies. International travel remains 5.5 per cent below pre-pandemic levels but that gap is rapidly closing. And domestic markets have been above their pre-pandemic levels continuously since April.

“Aviation’s rapid recovery from Covid demonstrates just how important flying is to people and to businesses.”

In December, Iata forecast that airline industry net profits would reach $US$25.7 billion ($41.3b) in 2024 for a 2.7 per cent net profit margin. That would be a slight improvement over 2023, which is expected to show a $23.3b net profit.

Airline industry operating profits are expected to reach $49.3b in 2024 from $40.7b in 2023.

After bumper profits last year, Air New Zealand has warned that it expects its first-half earnings to be at the lower end of its forecast, because of weak travel demand and increased competition from United States airlines.

This week it dropped promotional fares on some key US routes.

The airline has forecast earnings before tax for the six months ended December 31 of between $180 million and $NZ230m.

For the same period last year, the carrier had reported a statutory profit before tax of $299m.

“Early signs of softness in domestic travel, particularly corporate and government travel have continued, with late booking activity remaining weaker compared to the prior year,” the company said in December.

Air NZ also expects the second half of the current fiscal year to be

Economic headwinds are not deterring people from taking to the skies. Iata director general Willie Walsh

increasingly challenging.

In parallel with aviation’s recovery, governments have recognised the urgency of transitioning from jet fuel to sustainable aviation fuel (Saf ).

At a conference on aviation alternative fuels in November, governments agreed there should be 5 per cent carbon savings by 2030 from Saf. At the Cop28 climate conference in December, governments agreed a broad transition from fossil fuels is needed to avoid the worst effects of climate change.

“Airlines don’t need convincing. They agreed to achieve net zero carbon emissions by 2050 and every drop of Saf ever made in that effort has been bought and used,” Walsh said.

The world’s biggest maker of Saf, Neste, produces about 1.5 million tonnes of the fuel a year and hopes to increase capacity to 2.5 million tonnes a year.

The airline industry uses an estimated 300 million tonnes of traditional JetA1 fuel annually.

Saf costs between three and to five times as much as that of traditional fuel.