GENEVA: The global airlines industry is expected to earn a 2.7% net profit margin on record revenues in 2024, according to the International Air Transport Association (IATA).
Andrew Matters, IATA’s director of policy and economics, revealed that the industry’s net profits are expected to reach US$25.7 billion in 2024, a slight improvement from the US$23.3 billion net profit expected for 2023.
He also revealed that total revenue in 2024 was expected to grow 7.6% year-over-year to a record US$964 billion. Expense growth is expected to be slightly lower, at 6.9%, or US$914 billion.
Operating profits are forecasted to reach US$49.3 billion in 2024 from US$40.7 billion in 2023.
IATA director-general Willie Walsh said that, however, industry profits must be put into “proper perspective”.
“While the recovery is impressive, a net profit margin of 2.7% is far below what investors in almost any other industry would accept,” he said at a session on the industry’s outlook for 2024 at IATA’s Global Media Day here.
He said it is far too little to build a future that is resilient to shocks for a critical global industry on which 3.5% of gross domestic product (GDP) depends and from which 3.05 million people depend on for their livelihoods.
IATA also projected that about 4.7 billion people are expected to travel in 2024, a “historic high” that exceeds pre-pandemic figures of 4.5 billion in 2019.
Passenger revenues are expected to reach US$717 billion in 2024, a 12% increase from 2023 (US$642 billion).
Consumers can expect airfares to continue to increase in tandem with rising costs, particularly oil. IATA’s data, however, indicated that competition between industry players will continue to drive prices down.
IATA also revealed that the industry recovered from the pandemic at different speeds depending on the regions, with North America, Europe and the Middle East taking the lead with its net profits in 2023.
North America is expected to reach a net profit of US$14.4billion in 2024 (4% net profit margin), Europe US$7.9 billion (3.3%), and the Middle East US$3.1 billion (4.8%).
Asia Pacific, however, is expected to only catch up in 2024 with a targeted net profit of US$1.1 billion (0.5% net profit margin), while Latin America and Africa are expected to trail behind.
While some of the region’s main players recovered from the pandemic quickly, international travel to and from the region saw a slower uptick due to China only lifting its travel restrictions from August 2023.
IATA represents some 320 airlines, comprising 83% of global air traffic. Its statistics cover international and domestic scheduled air traffic for member and non-member airlines. - FMT
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