Airline profitability for 2023 exceeded June projections from the International Air Transport Association, the organization announced Wednesday.
IATA now projects global airline revenue for 2023 to reach $896 billion, $93 billion higher than forecast six months ago. Expenses also are anticipated to increase to $855 billion, $74 billion higher than the previous outlook. Still, IATA projects the industry’s net profit to reach $23.3 billion in 2023, significantly higher than the June forecast of $9.8 billion.
The improvement was driven by passenger business, revenue from which IATA projects to increase to $642 billion, $96 billion higher than the prior outlook, according to IATA.
Select Regional Performance
North American carriers were the first to return to profitability in 2022 and continued to earn a profit in 2023, according to IATA. The region’s carriers are projected to report a net profit of $14.3 billion in 2023 and $14.4 billion in 2024. IATA projects traffic in 2024 to increase 6.3 percent year over year and 8.1 percent compared with 2019. Capacity is projected to be up 6 percent year over year, and 8.1 percent versus 2019.
North American “consumer spending has remained solid, despite cost-of-living pressures, and the demand for air travel remains robust and is expected to outpace growth in capacity into 2024,” according to IATA.
IATA projects European carriers to have a net profit of $7.7 billion in 2023 and $7.9 billion in 2024. Demand in 2024 is forecast to be 10.5 percent higher year over year and 7 percent higher compared with 2019 levels. IATA projects 2024 capacity to increase 8.8 percent versus a year prior and 7 percent compared with 2019.
The key risks to Europe’s performance “relate to the tight labor market, and the war in Ukraine and in the Middle East,” according to IATA.
Asia-Pacific carriers in 2023 are forecast to report a $100 million loss but return to a net profit of $1.1 billion in 2024. IATA projects year-over-year 2024 demand to increase 13.5 percent, but still lag 2019 levels by 1.4 percent. Capacity, too, is forecast for 10.6 percent growth versus 2023 but decrease by 1.4 percent versus 2019.
“While some of the region’s main domestic markets recovered quickly from the pandemic, international travel to/from the region was subdued as China only eliminated the last of its international travel restrictions in mid-2023,” according to IATA.
2024 Global Outlook
IATA projects 2024 airline revenue to grow 7.6 percent year over year to a record $964 billion, generating an anticipated profit of $25.7 billion. Expenses are forecast to increase 6.9 percent to $914 billion.
Passenger revenue is projected to increase 12 percent year over year to $717 billion, with 40.1 million flights projected to be on offer, exceeding the 2019 level of 38.9 million and up from the 36.8 million flights expected in 2023. Total traffic in 2024, as measured in revenue passenger kilometers, is projected to be up 9.8 percent year over year, however IATA said 2024 will mark the end of the “dramatic year-on-year increases” the industry has seen during the recovery between 2021 and 2023.
About 4.7 billion people are expected to travel in 2024, “an historic high that exceeds the pre-pandemic level of 4.5 billion recorded in 2019,” according to IATA.
“Considering the major losses of recent years, the $25.7 billion net profit expected in 2024 is a tribute to aviation’s resilience,” IATA director general Willie Walsh said in a statement. “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, the outlook indicates that we can expect more normal growth patterns for both passenger and cargo.”
IATA also warned that the industry profitability was “fragile” and could be affected by many factors, including global economic developments, war, continued supply-chain challenges and regulatory risk.
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