…IATA projects overall revenue in 2024 to rise faster than expenses (7.6% vs 6.9%), strengthening profitability.
…Industry revenues are expected to reach an historic high of $964 billion in 2024.
…An inventory of 40.1 million flights is expected to be available in 2024, exceeding the 2019 level of 38.9 million and up from the 36.8 million flights expected in 2023.
THUR, DEC 07 2023-theGBJournal|Global airline industry watchdog, International Air Transport Association (IATA) estimates that industry net profits are expected to reach $25.7 billion in 2024 (2.7% net profit margin).
”That will be a slight improvement over 2023 which is expected to show a $23.3 billion net profit (2.6% net profit margin),” IATA said in their latest industry report released on Wednesday.
Willie Walsh, IATA’s Director General, says the industry outlook is ”a tribute to aviation’s resilience” considering the major losses of recent years, and notes that the speed of the recovery has been extraordinary; yet it also appears that the pandemic has cost aviation about four years of growth.”
IATA projects overall revenue in 2024 to rise faster than expenses (7.6% vs 6.9%), strengthening profitability.
It says although operating profits are expected to increase 21.1% ($40.7 billion in 2023 to $49.3 billion in 2024 ), net profit margins increased at less than half the pace ( 10% ) largely due to increased interest rates expected in 2024.
Industry revenues are expected to reach an historic high of $964 billion in 2024. An inventory of 40.1 million flights is expected to be available in 2024, exceeding the 2019 level of 38.9 million and up from the 36.8 million flights expected in 2023.
Passenger revenues are expected to reach $717 billion in 2024, up 12% from $642 billion in 2023. Revenue passenger kilometers (RPKs) growth is expected to be 9.8% year on year.
Although that is more than double the pre-pandemic growth trend, 2024 is expected to mark the end of the dramatic year-on-year increases that have been characteristic of the recovery in 2021-2023.
The high demand for travel coupled with limited capacity due to persistent supply chain issues continues to create supply and demand conditions supporting yield growth. Passenger yields in 2024 are expected to improve 1.8% compared with 2023.
Reflecting the tight supply and demand conditions, efficiency levels are high with the load factor expected to be 82.6% in 2024, slightly better than 2023 ( 82% ) and the same as in 2019.
Reflecting further in the performance, Walsh put the profitability in perspective, saying, ”While the recovery is impressive, a net profit margin of 2.7% is far below what investors in almost any other industry would accept. Of course, many airlines are doing better than that average, and many are struggling.
But there is something to be learned from the fact that, on average airlines will retain just $5.45 for every passenger carried. That’s about enough to buy a basic ‘grande latte’ at a London Starbucks. But it is far too little to build a future that is resilient to shocks for a critical global industry on which 3.5% of GDP depends and from which 3.05 million people directly earn their livelihoods.
Airlines will always compete ferociously for their customers, but they remain far too burdened by onerous regulation, fragmentation, high infrastructure costs and a supply chain populated with oligopolies.’
Meanwhile, IATA said its November 2023 passenger polling data supports the optimistic outlook. It said. A third of travelers polled say they are traveling more than they did pre-pandemic.
-Some 49% indicate that their travel habits are now similar to pre-pandemic. Only 18% said that they were traveling less.
-Looking ahead, 44% say that they will travel more in the next 12 months than in the previous 12 months. Only 7% say they will travel less and 48% expect to maintain similar levels of travel in the coming 12 months as in the previous 12 months.
IATA also highlighted the risks to the projections, including global economic developments, war, supply chains issues and regulatory risk which potentially could push airlines costs up.
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