While the international civil aviation market is recovering rapidly, many foreign airlines have achieved the best performance in history. As of May 5, many international airlines such as Emirates and Singapore Airlines have released their 24-2022 financial reports, and some of them have reached record highs in revenue and net profit. Although international capacity has not fully recovered, the surge in travel demand has given some airlines in international hub cities the first to take dividends. At present, the capacity of the domestic civil aviation market recovered rapidly in the first quarter, and the losses of the three major domestic airlines also narrowed significantly. Industry insiders believe that with the resumption of international routes, summer transportation will usher in the peak of industry recovery, and the domestic civil aviation market is expected to turn a profit this year.

SIA posted its highest profit in 76 years

According to the Emirates Group's 2022-23 financial year results, as of March 3 this year, the group's net profit, revenue and cash balance all reached a record high, with a net profit of AED 31.109 billion (US$30 billion) and revenue of AED 1198.326 billion (US$<>.<> billion), a complete turnaround.

Also turning around is Singapore Airlines. According to SIA Group's financial report, as of the end of March this year, Singapore Airlines' annual net profit reached S$3.21 billion, setting a record profit in the company's 57-year history.

In addition to the above two international airlines, Turkish Airlines also released its 2022 annual financial report. According to the financial report, Turkish Airlines' total revenue was $184.2019 billion, an increase of 39% from <> and a record high. Previously, Turkish Airlines had achieved net profit growth for six consecutive quarters.

However, not all international airlines have achieved such impressive results. According to the first quarter 2023 reports of many airlines, foreign aviation giants including Delta, Lufthansa, Air France, KLM Group, etc. are still in a loss-making state, but the loss is gradually narrowing compared with the same period last year.

Transfer flights to welcome high fare bonuses

According to data released by the International Air Transport Association (IATA), the total global air traffic (measured by revenue passenger kilometers) in 2022 increased by 64.4% year-on-year, recovering to 2019.68% of the 5 level, and international passenger traffic increased by 152.7% year-on-year, recovering to 2019.62% of the 2 level. Although the international civil aviation market has recovered rapidly over the past year, it has not yet recovered to 2019 levels. What is the reason for the performance of foreign airlines such as Emirates and Singapore Airlines?

In their earnings reports, Emirates and Singapore Airlines both said that the excellent performance was closely related to strong market demand. According to Emirates' financial report, in the 2022-23 financial year, the total number of passengers was 4360.79 million, with a passenger occupancy rate of 5.2023%. As of 3 March 31, Emirates' route network covers 150 destinations across six continents, with nine cities being all-cargo. Singapore Airlines and its airline Scoot carried a total of 9.2650 million passengers, a six-fold increase from 2022. Load factor jumped 6.55 percentage points to 3.85%, the highest level in the Group's history.

"In January and February 2022, due to the impact of the epidemic, the international aviation market was relatively low. However, with the gradual lifting of subsequent entry and exit restrictions, after March 1, the demand for entry and exit in the international market has exploded, and international flights have entered a rapid recovery stage. Civil aviation industry insider Li Hanming believes.

Lin Zhijie, a civil aviation industry insider, also said that some countries took the lead in opening their doors, the international market recovered earlier, and several airlines such as Emirates have enjoyed the dividends of high fares in the important transit market, so although passenger traffic has not fully recovered, revenue has exceeded previous achievements. Among them, the impact of geographical location is also very significant. Li Hanming further analyzed that Singapore Airlines and Emirates headquarters are located in the corridor between Europe and Oceania, located at the third point, and are hubs connecting routes to all continents. Turkish Airlines' main airport, Istanbul Airport, is also one of the busiest airports in Europe.

In addition, the continued profitability of the air cargo business of several airlines further contributed to the performance. Lin Zhijie believes that "the air cargo market was still at a high level last year, so it contributed a lot of profits". Although passenger flights gradually resumed, cargo demand decreased, and cargo revenue declined year-on-year. But for Singapore Airlines, cargo revenue is still 2019% above calendar year 83 levels. Emirates' SkyCargo segment was a solid performer, contributing 16% of the company's revenue. According to IATA data for 2022, Turkish Airlines has quadrupled its cargo market share in the past decade.

The record performance is also closely related to fuel costs. According to Emirates financials, fuel accounted for 36% of operating costs, compared to 2021% in the 22-23 financial year. "Under the trend of rising international oil prices, for Emirates, relying on the UAE's oil resources can alleviate the high cost pressure caused by fuel to a certain extent." Li Hanming said.

Domestic civil aviation is expected to turn around this year

While the performance of international airlines has reversed, the domestic civil aviation market has also shown a rapid recovery trend.

According to the first-quarter financial reports released by Air China, China Eastern Airlines and China Southern Airlines, the revenue of the three major airlines totaled 813.84 billion yuan, and the total loss reached 86.27 billion yuan. It is worth noting that the three private airlines of Hainan Airlines, Spring Autumn and Jixiang had a total revenue of 214.53 billion yuan, and a total net profit of 6 million yuan in the first quarter, turning losses into profits. "This year's Spring Festival is the first travel peak after the implementation of 'Class B and B Management', and many airlines have shown a significant recovery in the first quarter." Li Hanming said.

From the industry-wide data, domestic passenger routes have basically recovered to close to or exceed the level of 2019. According to the data of the regular press conference of the Civil Aviation Administration of China, the total transportation turnover of the whole industry in April was 4.93 billion tonne-kilometers, recovering to 1.2019% of the same period in 88; The scale of civil aviation passenger transportation continued to recover, completing 6.5027 million passenger traffic, recovering to 5.2019% of the same period in 94, of which the scale of passenger transportation on domestic routes exceeded the pre-epidemic level, an increase of 6.2019% over the same period in 3.

According to the monthly operating data disclosed by domestic airlines, the main indicators have increased significantly. In April this year, Air China, China Eastern Airlines and China Southern Airlines increased their passenger capacity investment by 4.467%, 1.736% and 39.285% respectively year-on-year, and passenger turnover increased by 87.630%, 5.959% and 67.411% respectively.

"The recovery of domestic routes is very good, but for domestic airlines, the recovery of outbound routes is also an important part of revenue." Li Hanming said, "The resumption of inbound and outbound flights is limited by objective factors such as capacity and visas, and its recovery will still take some time. ”

Since May, domestic airlines led by the three major airlines have continued to restore and encrypt international routes. In May, China Eastern increased its number of routes to Japan to 5 and to South Korea to 5. In June, China Southern Airlines will resume flights to Mudanjiang-Seoul on the 11st and Shenzhen-Sydney on the 16th. Some insiders said that under the premise of not being limited by other objective factors, international routes will fully recover growth.

"Last year was the toughest year in the history of the civil aviation industry, and the amount of losses exceeded the 2020 and 2021 combined. However, the recovery of the civil aviation industry this year has been very rapid. Given the relatively long recovery time for international routes, the oversupply of the industry as a whole will continue for several months. Lin Zhijie believes that "just experienced the best 'May Day', it is expected that this year's summer luck may usher in another peak of industry recovery, overall, it is expected that the industry can turn losses into profits this year." ”

Beijing Business Daily reporter Guan Zichen Intern reporter Niu Qingyan