Montreal – Airports Council International (ACI) World has published its twelfth quarterly assessment analyzing the impact of the COVID-19 pandemic, its effects on airports, and the path to recovery.
With the removal of travel restrictions and quarantine requirements for vaccinated travellers in 2022, there has been an upsurge in demand across many markets. Global passenger traffic finished the year at 72% of 2019 levels. Market segments vary markedly – international passenger numbers were at 60% of 2019 levels whereas domestic was at 79% in 2022.
The macro economy and aviation
As the COVID-19 pandemic shaped many near-term policy decisions over the last three years, the global economy faces an array of challenges in 2023. From the ongoing conflict in Ukraine to a looming economic slowdown in many major economies, there are risks that threaten to disrupt the pace of the recovery from the pandemic. The most obvious manifestation of such risks is the significant increase in inflation across many economies. The interplay between geopolitical conflicts and rising prices remains a top economic threat to the global economy. Many analysts suggest that the inflation rate has already peaked and will subside in 2023, facilitated by aggressive monetary tightening by central banks. While higher interest rates help to cool aggregate demand and ensure price stability, they may induce an economic slowdown. Aviation is very much linked to such macroeconomic factors – like any other good or service, the impact of prices and disposable income remain important determinants of air transport demand. Thus, uncertainty regarding a swift recovery of the aviation industry remains omnipresent, especially in the near term.
The speed of the recovery for 2023 and beyond still depends on several factors with a number of market pendulums moving in opposite directions, thus creating a level of uncertainty. On the one hand, the possible slowing in Gross Domestic Product (GDP) growth in major economies coupled with the rise in airfares due to higher jet fuel prices weighs negatively on demand, representing a downside risk for the industry in 2023. This could dampen or delay the recovery from the COVID-19 pandemic and reach 2019 passenger traffic volumes. On the other hand, a strong labour market and the re-opening of China, the second largest aviation market after the United States, represents an important boost to global passenger traffic.
Even with the ongoing presence of COVID-19 variants and the recent imposition of travel restrictions and testing requirements by several countries on travellers departing China, the re-opening of its borders represents an overall gain, both domestically within the Chinese aviation market and for international travel.
Chart 1. Medium-term global passenger traffic projection (indexed, 2019 = 100)
Source: ACI World
