What Lies Ahead for the Aviation Industry in 2023?

The past year has seen aviation rebound in many ways. The cargo sector, in particular, had a good 2022, and certain regions, notably North America and Europe saw passenger demand increase steadily. It was not all good news however as we saw a continuation of troublesome staff shortages, significant impacts from the Ukraine War, rising inflation, fuel cost challenges, and several natural disasters all of which disrupted aviation. So what can we expect in 2023? The industry observers have already cast their projects for the year ahead. Let’s take a look at what they are forecasting.

Moody’s Project a Positive Outlook Despite Staff Shortages

Moody’s Investor Service is forecasting a positive outlook for the aviation industry in 2023. The organization is projecting operating profits for those airlines it rates to increase by more than 200% in 2023. Its projection is based on the premise that increased travel by large corporations and the rebuilding of long-haul international routes will make the recovery more resilient despite declining gross domestic product (GDP) forecasts and other economic factors could increase the risk of falling passenger demand.

According to Moody’s Senior Vice President Jonathan Root, “While ongoing recovery does not make the industry immune to recessionary pressures, we believe that because of pandemic-related dynamics, the industry’s earning would not fall as much as they did in the last recession.” Also noted was that staffing shortages at airlines, airports, and air traffic control have forced airlines in various regions to restore their capacity at a slower rate than they had planned. This, lower capacity than demand, enabled them to raise their ticket prices to cover their higher operating costs. Moody’s is predicting capacity to remain below demand in 2023.

EUROCONTROL Forecasts a Downward Revision of Oxford Economics Figures

Geopolitical and natural disruptions coupled with rising inflations and declining growth caused EUROCONTROL to revise the 2023 baseline projections of Oxford Economics. The organization also projected that staff shortages might occur in the aviation industry in 2023, impacting both airline and airport capacity. These staffing challenges were also expected to affect the global logistics supply chain which, in turn, would have a ripple effect on cargo flights.

In its Forecast Update 2022-2028, EUROCONTROL broke down its 2023 projects in three scenarios referred to as high (best case), baseline, and low (worse case). In the high scenario, there would be good passenger confidence, business travel would have a fast bounce-back, and airports and airlines would mostly be able to bring back capacity in 2023 and cargo would experience limited staffing issues and global cargo output would increase. In the baseline scenario, there would be a weak GDP for most European states, inflation would impact demand, environmental concerns would peak and some airlines and airports would experience continued staffing/capacity issues in 2023, with cargo gaining only slight increases in 2023. In the low, worse case scenarios, a large number of European states would experience a deep recession in 2023, passenger demand would be negatively impacted by inflation, COVID-19 variants would surge introducing, and there would be extensive staffing and capacity issue, with the cargo sector experiencing a deterioration of staffing issues in 2023.

Looking further ahead over the period from 2022-2028, among the risks that exist?(...)

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