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Despite a few challenging years, IATA predicts global net profits to reach $25.7 billion in 2024, reflecting a 2.7 per cent net profit margin. This outlook follows the $23.3 billion net profit that is expected in 2023.
The International Air Transport Association (IATA) has released optimistic projections for the airline industry, anticipating a substantial rebound in 2024.
Despite a few challenging years, IATA predicts global net profits to reach $25.7 billion in 2024, reflecting a 2.7 per cent net profit margin. This outlook follows the $23.3 billion net profit that is expected in 2023.
The recovery is attributed to increased demand for air travel, especially in
China, as the world emerges from the COVID-19 pandemic.
Resilience amid challenges
IATA Director General Willie Walsh acknowledged the aviation industry's resilience, saying, “The $25.7 billion net profit expected in 2024 is a tribute to aviation’s resilience.”
He emphasised on the extraordinary speed at which the industry is recovering while noting that the pandemic has set aviation back approximately four years in terms of growth.
Despite this comeback, the 2.7 per cent net profit margin is significantly lower than what would be acceptable in many other industries, highlighting the ongoing challenges airlines face.
Key projections and drivers
Revenue surge and operating profit growth
IATA's projections highlight a robust financial outlook for 2024. Total revenues are expected to reach a record-breaking $964 billion, growing at a rate of 7.6 per cent. Operating profits are set to increase from $40.7 billion in 2023 to $49.3 billion in 2024.
This positive trend is driven by a surge in air travel demand, with an estimated 4.7 billion people expected to travel in 2024, surpassing pre-pandemic levels.
Passenger and cargo dynamics
Passenger revenues are anticipated to reach $717 billion in 2024, a 12 per cent increase from 2023, driven by strong demand and improved passenger yields. Cargo revenues, on the other hand, are projected to decrease to $111 billion in 2024 due to a decline in demand compared to the exceptional peak observed in 2021. Despite this reduction, yields will remain historically high.
Expenses and fuel challenges
While revenues are expected to outpace expenses, the industry is not without challenges. Expenses are projected to grow to $914 billion in 2024, with fuel costs accounting for 31 per cent of total operating costs. The average fuel price is estimated to be $113.8 per barrel, contributing to a total fuel bill of $281 billion. Airlines are expected to consume 99 billion gallons of fuel in 2024.
Sustainability efforts and carbon footprint
Recognising the environmental impact of the aviation industry, IATA has outlined efforts to address carbon emissions. Sustainable Aviation Fuels (SAF) and carbon credits are expected to play a crucial role in reducing the industry's carbon footprint. SAF production could reach 0.53 per cent of total fuel consumption in 2024, adding $2.4 billion to the fuel bill. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is estimated to cost $1 billion in 2024.
Regional roundup
North America leads financial recovery
Financial performances across regions vary. North America stands out, having returned to profitability in 2022 and strengthening further in 2023. Consumer spending remains solid, and demand for air travel is expected to outpace capacity growth into 2024.
Europe's resilience amid challenges
Europe's performance in 2023 exceeded expectations, with strong demand expected to continue in 2024. However, risks related to the tight labour market and geopolitical tensions pose potential challenges.
Asia Pacific's recovery
While some domestic markets in Asia Pacific recovered quickly, international travel remained subdued until mid-2023. The region is expected to post a small loss in 2023 but is projected to return to profitability in 2024.
Latin America and Africa face challenges
Latin America is expected to face economic and social turmoil impacting airline performance in 2024, with reducing losses. Meanwhile, African carriers are anticipated to generate losses in both 2023 and 2024 due to economic, infrastructure, and connectivity challenges.
West Asia's swift recovery
West Asia is set to deliver strong financial performances in both 2023 and 2024, driven by swift rebuilding of international networks and efficient fleets.
2023: Better than expected
In 2023, the industry outperformed earlier projections, reaching $23.3 billion in net profit, significantly higher than the forecasted $9.8 billion in June. Passenger business drove this improvement, with revenues surpassing expectations by $96 billion, reaching $642 billion. Cargo revenues, however, fell short of projections at $134.7 billion.
Traveller satisfaction and industry perception
Public opinion polls conducted by IATA reveal high levels of traveller satisfaction. A vast majority, 97 per cent, expressed satisfaction with their travel experiences, with 88 per cent believing air travel enhances their lives and 80 per cent considering it good value for money. Travellers have expressed confidence in the industry's commitment to sustainability, with 84 per cent supporting the goal of achieving net zero emissions by 2050.
Source: wionews
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