Source: AFP
Airlines should carry record numbers of passengers next year as the industry puts the Covid-19 pandemic behind it, the industry’s top trade association said on Wednesday, although profitability remains a concern.
The International Air Transport Association (IATA), in its traditional review of industry trends as it nears the end of the year, said more normal growth patterns are expected going forward as the industry has recovered to pre-pandemic levels.
“People love to travel and this has helped airlines return to pre-pandemic levels of connectivity,” said IATA director-general Willie Walsh, as the organization predicts 4.7 billion people will take to the skies in 2024.
IATA noted that this is a “historic high surpassing the pre-pandemic level of 4.5 billion recorded in 2019”.
For this year, it expects 4.29 billion passengers, down slightly from its June forecast of 4.35 billion.
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Walsh said “the speed of the recovery has been extraordinary,” but also noted that “it appears the pandemic has cost aviation about four years of growth.”
Aviation has been hit hard by travel restrictions imposed by countries in a bid to slow the spread of Covid-19, with a number of airlines going out of business and others being bailed out as the industry racked up $183 billion in losses in 2020. -2022.
IATA raised its earnings outlook, expecting airlines to post a net profit of $23.3 billion in 2023, more than double the $9.8 billion it forecast in June.
IATA forecasts a net profit of $25.7 billion in 2024 on revenue growth of 7.6 percent to $964 billion.
Walsh called the numbers a “tax on the resilience of aviation” but said the industry’s profits should be put into perspective.
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A “net profit margin of 2.7 percent is well below what investors would accept in almost any other industry,” he said.
Grande latte price
Airlines will keep an average of just $5.45 for each passenger carried, according to IATA calculations.
“That’s enough to buy a basic grande latte in a London Starbucks,” said Walsh, who previously ran IAG, the parent company of British Airways.
“But it is too little to build a shock-proof future for a critical global industry on which 3.5% of GDP depends and on which 3.05 million people directly earn their livelihood,” he added.
The situation will continue to vary significantly by region.
US, European and Middle Eastern carriers are expected to continue to post profits in 2024, with Asia Pacific airlines expected to return to profitability.
African and South American carriers are expected to remain in the red.
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More people want to fly
IATA said the upbeat outlook for the industry was supported by its survey data showing that nearly half of people’s travel habits have returned to pre-pandemic patterns.
A third reported traveling more and just 18 percent said they were still traveling less.
Additionally, it reported that 44% of respondents said they would travel more in the next 12 months than in the previous 12 months.
Only 7% said they would travel less and 48% expect to maintain similar levels of travel in the next 12 months as in the previous 12 months.
This growth comes despite fares rising in 2023 as demand outstrips seat capacity, with airlines grounded due to engine problems and delayed delivery of new aircraft.
IATA expects fare growth to moderate in 2024, while fuel costs are expected to remain high and continue to account for nearly a third of costs.
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As negotiators debate the thorny issue of fossil fuels at the COP28 climate summit, IATA said the aviation industry will use 374 billion liters of fuel in 2024 and spew 939 million tonnes of CO2 into the atmosphere.
While the aviation industry accounts for less than 3% of global CO2 emissions, it serves only a small percentage of the world’s population.
The industry hopes to switch to sustainable aviation fuels to meet its 2050 net-zero goal, but IATA expects they will account for just 0.53 percent of consumption compared with 0.2 percent this year.
Source: AFP