The airline industry is anticipated to achieve a net profit of USD 25.7 billion and reach a record-breaking revenue of USD 964 billion in 2024, marking a positive trajectory in both passenger and cargo segments, the International Air Transport Association (IATA) said on Wednesday. Contrary to earlier projections by IATA in June, the net profit for 2023 is estimated to be USD 23.3 billion, significantly surpassing the initial projection of USD 9.8 billion. IATA Director General Willie Walsh expressed enthusiasm about India’s aviation market, considering it a “hugely exciting market” and showed optimism about its growth potential, reported PTI.
Industry Overview and Revenues
IATA, a global grouping of over 300 airlines, forecasts industry revenues to hit an unprecedented USD 964 billion in 2024, driven by an expected inventory of 40.1 million flights, surpassing the levels seen in 2019 and 2023.
Financial Projections and Passenger Trends
Anticipating an operating profit of USD 49.3 billion in 2024, the industry expects 4.7 billion people to travel, exceeding pre-pandemic levels. Passenger load factors are approaching 2019 levels support the financial recovery of airlines.
Fuel Costs and Expenses
The industry estimates a total fuel bill of USD 281 billion, accounting for 31% of operating costs, with fuel consumption projected to be 99 billion gallons in 2024. Total expenses are expected to rise to USD 914 billion.
Factors Influencing Profitability
High demand for travel, coupled with supply chain challenges, continues to create conditions supporting yield growth. However, IATA notes that a net profit margin of 2.7% is below expectations due to regulatory burdens, fragmentation, infrastructure costs, and supply chain challenges.
Asia Pacific Market Insights
While some major domestic markets in the Asia Pacific region recovered swiftly, international travel to/from the region remained subdued until mid-2023. The region is expected to report a net loss of USD 0.1 billion in 2023 and a net profit of USD 1.1 billion in 2024.
Global Economic Factors and Risks
IATA highlights global economic developments, war, supply chains, and regulatory risks as factors influencing the airline industry’s profitability, emphasizing the need for careful consideration of these external elements.
Sustainable Aviation Fuel (SAF) Production
IATA reports a doubling of sustainable aviation fuel production to over 600 million liters in 2023, with projections reaching 1.875 billion liters in 2024. The increased use of SAF could contribute USD 2.4 billion to the industry’s fuel bill in the coming year.
(With PTI Inputs)