4.7b people expected to travel by air in 2024, about 4% more than pre-pandemic levels: Iata - The Straits Times

GENEVA - Airlines are expected to see higher demand for air travel in 2024, with 4.7 billion people forecast to travel.

This will be a historic high and about 4 per cent more than the 4.5 billion people who flew in 2019 before the Covid-19 pandemic wreaked havoc on air travel.

Releasing these projections on Dec 6 at its global media day in Geneva, Switzerland, the International Air Transport Association (Iata) noted that the aviation industry is projected to reach a net profit of US$25.7 billion (S$34.4 billion) in 2024 as it continues recovering from major losses incurred during the pandemic.

Iata is a trade association representing 320 airlines that collectively make up 83 per cent of global air traffic.

The industry body forecast that the net profitability of airlines will largely stabilise in 2024, but will continue lagging behind the cost of capital on a global level.

The aviation industry’s revenues are expected to rise 7.6 per cent to a record US$964 billion in 2024, from a better-than-expected US$896 billion in 2023. This will be faster than the 6.9 per cent growth in expenses in 2024 totalling US$914 billion, said Iata.

Iata director-general Willie Walsh said the projected 2024 net profit of US$25.7 billion is a tribute to the industry’s resilience, considering the major losses that it shouldered in recent years. Net profit is expected to come in at US$23.3 billion in 2023.

Mr Walsh described the industry’s recovery as “impressive” but said its projected net profit margin for 2024 of 2.7 per cent is “far below what investors in almost any other industry would accept”. Net profit margin is a measure of how much net income or profit is generated as a percentage of revenue.

Operating profit is expected to increase by 21.1 per cent to US$49.3 billion in 2024, but the industry’s net profit margin will rise at less than half this pace, mostly owing to higher interest rates expected in 2024.

Putting these figures in perspective, Mr Walsh, who was chief executive of British Airways, noted that airlines will retain just US$5.45 for every passenger carried. This, he said, is enough to buy a “basic grande latte at a London Starbucks” and is “far too little” for the aviation industry, on which 3.5 per cent of global gross domestic product depends.

He cited onerous regulations, a large number of players in the industry, high infrastructural costs, and a supply chain populated by a small number of companies as factors pulling down airline profits.

Raising the problem of airport charges – fees paid by airlines for the use of airport facilities – as an example, Mr Walsh said many airports struggle to act in a commercial fashion as they are controlled by monopolies with little incentive to perform efficiently in the interests of airlines and consumers.

On top of that, problems such as global economic strains, higher oil prices due to the Russia-Ukraine and Israel-Hamas wars, and regulatory risks could also weaken the aviation industry’s profitability.

Iata said carriers in North America, Europe and the Middle East are projected to post net profits in 2023, with Asia-Pacific airlines joining the fray in 2024. Those in Latin America and Africa are expected to incur losses.

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