Major airlines have seen a massive turnaround in the past year as profits and revenue began to flow for the first time since the beginning of the COVID-19 pandemic.
- Increased prices, efforts to lower costs have paid off, and high demand for air travel has paid off, with airfare increasing 40% by October 2022 and passengers proving willing to accept high-cost tickets.
- Major airlines, including International Consolidated Airlines Group—representing eight European airlines, including British Airways—Singapore Airlines, and Qantas Airways, report record profits for last year, despite widespread expectations of losses, The Wall Street Journal reports.
- A total expenditure decrease of 7.4% for Singapore Airlines helped the company’s third-quarter profits increase by 11.4%. Qantas reported $1.4 billion in half-year profit, in what CEO Alan Joyce called a “huge turnaround.”
Why It’s Important
Last year proved to be a mixed back for major airlines. The pandemic created enormous stress for the airline industry, with millions of annual travelers canceling business trips and vacations—while entire industries shifted to online communications through Zoom and remote work.
“This is our first full year back to profit since the start of the pandemic. All of our airlines were profitable,” says IAG CEO Luis Gallego.
Airlines faced recording-setting holiday travel for the first time in three years last year as travelers returned to pre-pandemic levels of travel during Labor Day, Thanksgiving, and Christmas. The stress of increased holiday travel and poor weather conditions led to multiple weekends of mass cancelations for major airlines, with Southwest Airlines canceling nearly 17,000 flights in two weeks. A subsequent NOTAM outage in January grounded all U.S. flights for the first time since 9/11.
The industry was also rocked by staffing shortages, aircraft shortages, and logistical troubles during the summer, with flight cancellations and lost luggage issues. China’s “Zero-COVID” policy also deeply hampered flights coming in and out of East Asia.
Airlines will likely cool airline prices after a period of time, but prices are expected to remain high for the immediate future. New South Wales Labor senator Tony Sheldon went as far as to accuse Qantas this week of profiteering from its current circumstances, saying, “there’s nothing to celebrate in Qantas making massive profits by ripping off customers with extortionate airfares during a cost-of-living crisis,” The Guardian notes.
“What we are seeing is that as we add capacity back in, fares are moderating. There’s plenty of competition. Qantas cannot dictate the airfares of the market,” says Joyce.