Global Aviation Sector Yet to Clear All Runways for Smooth Summer 2023 Travel Season

Global airline capacity is nearing the end of its post-COVID recovery, and the global airport industry has also been on a fast track to financial recovery. We are anticipating a very strong peak summer 2023 air travel season in terms of profitability and cash flow generation. However, the operational recovery has lagged behind. Long lines at security checkpoints and mishandled baggage were often observed at major international airports in 2022. Since the very underwhelming operating performance during last year’s peak summer season, airlines and airports globally have been actively bolstering their operations. Favourable developments include generally improved staffing levels, capacity increases at most airlines, and innovative efficiency-enhancing technologies that continue to be rolled out at airports. To what extent these actions enable the aviation sector to approach its operating potential remains to be seen.

“We believe a summer characterized by satisfactory, if not consistently ideal, travel operations would be positive for the recovery of the aviation industry, would give greater clarity regarding the trajectory of the sector's path toward normalized long-term operational resilience, and would support current credit ratings,” said Kevin Li, Senior Vice President, Infrastructure Finance, DBRS Morningstar. “Furthermore, heavy demand with lots of operational challenges offers opportunities for airlines, in conjunction with their associated airport service providers.”

For our Aviation Sector summer 2023 season outlook, please refer to the companion piece to this commentary: “Summer 2023 to Bring Global Aviation Tailwinds, U.S. and Europe Still to Expect Turbulence.”