Will the Airline Industry Sustain Profitability?

In 2024, the airline industry anticipates a net profit of USD 25.7 billion, displaying a steady climb from the estimated USD 23.3 billion for 2023. Despite this, IATA expresses concern over the slim 2.7 per cent net profit margin, a figure that falls short compared to most other industries.

The projection for 2024 reveals an impressive surge in global travel, with an estimated 4.7 billion individuals expected to travel, surpassing the pre-pandemic 2019 levels. Passenger load factors are inching closer to their 2019 levels, propelling the financial resurgence of airlines.

Regional Insights - Asia Pacific:

Cargo volume is slated to rise to 61 million tonnes in 2024, an increase from the 58 million tonnes anticipated in 2023, indicating a promising growth trajectory for the cargo segment.

While domestic markets in China, Australia, and India rebounded swiftly, international travel to and from the Asia Pacific region remained subdued until mid-2023 due to lingering travel restrictions in China. The region is poised to report a net loss of USD 0.1 billion in 2023 but is projected to recover to a net profit of USD 1.1 billion in 2024.

Financial Outlook:

IATA Director General Willie Walsh emphasizes that despite commendable recovery, the industry faces hurdles such as stringent regulations, high infrastructure costs, and dominance by oligopolies within the supply chain. Moreover, global economic shifts, conflicts, supply chain disruptions, and regulatory risks loom as potential influencers of the industry's profitability.

While operating profits are expected to soar by 21.1 per cent from USD 40.7 billion in 2023 to USD 49.3 billion in 2024, the pace of net profit margin growth is slower, at 10 per cent, primarily attributed to the anticipated rise in interest rates in 2024.