The International Air Transport Association (IATA) is expecting bellyhold capacity to return to “normal levels” in late 2023 or early 2024 as more passenger flights return to service and aircraft manufacturing for new orders starts to normalize.

Willie Walsh, IATA’s director general, said despite current headwinds in the market that continue to impact aviation recovery, there are also encouraging signs that the worst for the industry is over.

The IATA chief noted that passenger traffic is recovering and the disruption to the supply of widebody aircraft, and long-haul aircraft at both Boeing and Airbus appears to be now “under control.”

“As we get back to the levels of passenger traffic that we saw in 2019, you’ll see the cargo capacity in the bellyhold coming back as well,” Walsh told a recent press briefing.

The IATA chief added that the retirement of old planes and the move to replace them with smaller, more efficient aircraft will also boost the recovery in bellyhold space.

“Now we would expect the supply of aircraft to start to normalize but I think we’re still a little bit away from having the cargo capacity in belly hold aircraft back to where we saw it in 2019.”

“[But] what is also important is we saw quite a few retirements of 747s and A380s. As those aircraft will be replaced by smaller but more efficient and more cargo-capable aircraft, we will see that acceleration in the recovery of bellyhold capacity but it’s probably going to be 2023 or maybe early 2024 before we see it back to 2019 levels,” Walsh said.

The current headwinds in the market will also continue to impact recovery, according to the IATA chief, but “nothing unusual” for the industry, which has had to deal with oil price increases, and economic uncertainties in the past.

“These are all headwinds certainly but they’re headwinds we’ve faced before,” Walsh said. “High oil prices, are certainly nothing unusual for the industry to have to deal with and it ultimately gets reflected in ticket prices so I think some of these issues, we have witnessed previously.”

Walsh added that although these factors tend to have “some impact” on demand or the pace at which demand recovers, currently, the aviation industry is still seeing strong forward bookings

“The recovery and the pace of recovery have been good and I think it’s clear that many airlines are generating good cash balances as we go through this period where airlines are seeking to repair their balance sheets but strengthen their liquidity.”

“So, it’s a year with a challenging environment, but I think most airline management teams will be looking at the positives and reflecting on what they need to do to address the headwinds that are obvious to us at the moment,” the IATA chief added.

The lower cargo volumes seen in the past months compared to the levels in 2021 shouldn’t also be a cause of major concern, Walsh said as he pointed out that although more muted than previously seen, air freight performance remains “very good.”

“I don’t think I’d be concerned. We are seeing a very good performance from cargo and you can’t keep growing. There are some specific issues that have benefited air freight and will continue to benefit air freight,” Walsh said.

He noted that the disruption to sea freight has certainly been a positive for air cargo and the cost advantage that air freight has had over sea freight has also been an advantage.

“It is clear that for some time now, the capacity available, particularly on long-haul, has been lower than traditionally would be there because a lot of cargo tends to fly in the bellyhold of passenger aircraft and given the disruption to passenger networks, it’s meant that there’s been less capacity available in the market,” the IATA chief said.

Walsh explained that there is a “structural imbalance” between supply and demand when it comes to air cargo, but as airlines opt for aircraft with greater cargo capacity, there will also now be more space to accommodate air freight. This in turn will help drive down rates.

Meanwhile, asked whether the worst is over, Walsh signalled optimism that for most, operational challenges are done.

“I think in most airports it should be,” he said. “Certainly, the pace of recovery was faster than most people had expected.”

Meanwhile, despite the pace of recovery, IATA said the industry, in general, would not fully bounce back to the levels seen before the Covid-19 pandemic until 2024.

“My own view is no, I wouldn’t be more optimistic [of the timeline of recovery]. I think we had talked about 2024, and possibly 2023, but the restrictions that we’ve seen at some airports have dented a little bit the pace at which we are recovering, so I think 2024 remains an objective view on when we’re likely to get back to 2019 levels,” Walsh said during the briefing.

For her part, IATA chief economist Marie Owens Thomsen shared the same view.

“There are obviously regional variations around this central 2024 forecast for the industry as a whole, so we would expect the U.S. market to regain the 2019 level in 2023, and then the more closed markets in the Asia Pacific, notably China, to not to get there until 2025,” Thomsen said.

“Even if our forecast changes a little bit, on a quarterly basis, it’s just a question of a few months to the left or to the right so to speak, so even those variations would still leave the industry as a whole regaining the 2019 level in 2024.” Owens Thomsen added.

By Charlee C. Delavin

Asia Cargo News | Hong Kong