The International Air Transport Association (IATA) has predicted a reduction in Nigeria and other African airlines’ losses from $500 million in 2023 to $400 million in 2024.
IATA, headquartered in Switzerland, forecasts global airlines to generate approximately $964 billion in revenue next year.
Director general Willie Walsh, presenting the global airline industry outlook in Geneva, projects a global aviation profit of $25.7 billion in 2024, boasting a 22.7 per cent net profit margin fueled by record revenues.
The outlook report read in part, “Airline industry net profits are expected to reach $25.7 billion in 2024 (2.7 per cent net profit margin). That will be a slight improvement over 2023, which is expected to show a $23.3 billion net profit (2.6 per cent net profit margin).
“Airline industry operating profits are expected to reach $49.3 billion in 2024 from $40.7 billion in 2023. Total revenues in 2024 are expected to grow 7.6 per cent year over year to a record $964 billion.”
IATA anticipates a historic high in travel, estimating around 4.7 billion people travelling in 2024, surpassing the pre-pandemic level of 4.5 billion in 2019.
Walsh added that, “Considering the major losses of recent years, the $25.7 billion net profit expected in 2024 is a tribute to aviation’s resilience. People love to travel, and that has helped airlines come back to pre-pandemic levels of connectivity. The speed of the recovery has been extraordinary, yet it also appears that the pandemic has cost aviation about four years of growth.
From 2024 on, the outlook indicates that we can expect more normal growth patterns for both passenger and cargo.
“Industry profits must be put into proper perspective. While the recovery is impressive, a net profit margin of 2.7 percent is far below what investors in almost any other industry would accept. Of course, many airlines are doing better than average, and many are struggling. But there is something to be learned from the fact that, on average, airlines will retain just $5.45 for every passenger carried.
“That’s about enough to buy a basic ‘grande latte’ at a London Starbucks. But it is far too little to build a future that is resilient to shocks for a critical global industry on which 3.5 per cent of GDP depends and from which 3.05 million people directly earn their livelihoods.”
The IATA chief mentioned how airlines fiercely compete while facing tough regulations, high costs, and complex supply chains.
Fuel prices are expected to reach $113.8 per barrel in 2024, making up 31 per cent of costs at $281 billion. Although the industry is recovering well, profits are just 2.7 percent, much lower than in other industries.
This emphasises the need for realistic expectations despite the impressive recovery.
