Asia Pacific Airlines Soar to $8.8 Billion in Net Earnings in 2023, Marking a Strong Recovery

Published on June 18, 2024

Today, the Association of Asia Pacific Airlines (AAPA) announced that Asia Pacific airlines have remarkably recovered in 2023 with a significant turnaround in financial performance. After three years of financial downturns, these airlines collectively posted net earnings of US$8.8 billion for the year, fueled by robust demand for travel in both leisure and business sectors across regional and global markets.

The removal of the last travel restrictions from the pandemic era significantly boosted travel activity in 2023. This resurgence led to a 130.7% surge in international passenger traffic, quantified by revenue passenger kilometers (RPK). On the flip side, international air cargo demand, measured by freight tonne kilometers (FTK), declined by 2.8% year-over-year, affected by economic inflation, a strong US Dollar, and a reduced demand for goods.

In terms of revenues, Asia Pacific carriers recorded US$198.1 billion in 2023, marking a 54.8% increase from the US$128.0 billion in 2022. Passenger revenues soared by 105.4% to US$151.5 billion, thanks to the substantial rise in passenger volumes. However, as flight operations expanded, passenger yields fell by 6.7% to 8.6 US cents per RPK. Conversely, total cargo revenues declined significantly by 43.3% to US$21.0 billion in 2023, amid softening trade activities and declining freight rates, with cargo yields falling 41.7% to 33.6 US cents per FTK. Despite this drop, cargo yields were still higher than pre-pandemic figures.

Operating costs also climbed by 30.9% to US$182.6 billion in 2023, paralleling an increase in flight operations and network restorations. Fuel costs alone surged by 41.5% to US$57.7 billion, slightly offset by a 20% decrease in the average global jet fuel price to US$113.4 per barrel. Fuel costs constituted 31.6% of total operating expenses, a rise of 2.4 percentage points. Additionally, non-fuel expenses rose by 26.5% to US$124.9 billion, driven by increases in staff costs and fees for landing and route services.

Commenting on the financial results, Mr. Subhas Menon, AAPA Director General said, “In 2023, Asia Pacific airlines made a welcome turnaround following three consecutive years of steep losses during the COVID-19 pandemic years. The region’s carriers recorded a significant operating profit margin of 7.8%, compared to the -9.3% posted in 2022. Asian airlines benefitted from the vigorous recovery in passenger demand. While still relatively high compared to historical averages, the oil price declined which served to alleviate cost pressures stemming from persistent inflation and a robust US Dollar.”

Looking ahead, Mr. Menon said, “The outlook for Asian airlines is generally positive, as demand for air travel globally continues to be strong, complemented by resurgent growth in international air cargo markets. The region’s carriers continue to face numerous challenges, including delayed deployment of additional capacity due to supply chain constraints and persistent cost pressures.”

“Notwithstanding, Asia Pacific airlines remain nimble and proactive, seeking to open new routes and meet customer demand. Improving cost efficiency and profitability, as well as keeping the focus on safety standards, and sustainability targets, are ongoing priorities.”