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.
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,’' said the association’s director general Willie Walsh.
‘‘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 airline industry net profits would reach US$25.7 billion ($41.3b) in 2024 for a 2.7 per cent net profit margin. That will 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 warned that it expects its first-half earnings to be at the lower end of its forecast, due to weak travel demand and increased competition from United States airlines.
It has this week 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 $230m.
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.
The company also expects the second half of the current fiscal year to be increasingly challenging.
In parallel to aviation’s recovery, governments recognised the urgency of transitioning from jet fuel to Sustainable Aviation Fuel (Saf) for aviation’s decarbonisation.
A conference on Aviation Alternative Fuels in November saw governments agree that there should be 5 per cent carbon savings by 2030 from Saf.
This was followed up at Cop28 in December where governments agreed that we need a broad transition from fossil fuels 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,’' said Walsh.
There simply is not enough Saf being produced.
‘‘So we look to 2024 to be the year when governments follow-up on their own declarations and finally deliver comprehensive policy measures to incentivise the rapid scaling-up of Saf production,” he said.
The world’s biggest maker of Saf, Neste, had the production capacity for about about 1.5 million tonnes of the fuel as at the start of this year. The airline industry uses an estimated 300 million tonnes of traditional JetA1 fuel annually.
Saf costs between three and five times that of traditional fuel.
Neste has told the Herald it hopes to increase capacity to 2.2 million tonnes a year and is looking for more sources of raw materials such as animal fats and used oils as well as new technology and processes to expand further.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
