Trusted News Portal

IATA signals a vibrant comeback for aviation in 2024

0

Industry revenues are projected to reach a historic high of $964 billion

ANALYSIS | AGENCIES | The profits projected for airlines in 2024 are expected to stabilize, despite net profitability forecasted to be well below the cost of capital, according to the International Air Transport Association (IATA).

Industry insiders anticipate that the global aviation sector will generate $25.7 billion (Sh4.06 trillion) in profit in 2024, as international travel finally surpasses pre-pandemic levels.

The trade association for the world’s airlines suggests that the high profit margins will be sustained by approximately 4.7 billion people expected to travel during the year.

“Some 4.7 billion people are expected to travel in 2024, a historic high that exceeds the pre-pandemic level of 4.5 billion recorded in 2019,” stated IATA, the international trade agency of the world’s airlines. IATA represents about 320 airlines comprising 83 per cent of global air traffic.

As leisure travel demand softens and the phase of “revenge travel” concludes, the supply and demand equilibrium in the commercial airline industry is expected to stabilize airfares in 2024.

Kenya has already announced plans to leverage the potential of the 4.7 billion travelers by removing visa requirements for entry into the East African country.

Kenya’s economy heavily relies on its tourism industry, and the new visa-free policy is anticipated to significantly boost the sector by enhancing the country’s accessibility to international travelers.

This disclosure aligns with Kenya’s welcoming of the first batch of visitors under the new visa-free entry policy in the New Year. According to IATA’s Director General Willie Walsh, cargo volumes are expected to reach 61 million in 2023, up from 58 million in the previous year.

See also  Kabale District starts building staff houses at Maziba Health Centre IV – The Black Examiner

“These projections reflect the industry’s resilience and the popularity of air travel going forward,” added Walsh.

African airlines saw their air cargo volumes increase by 3.9 per cent in November 2023, slightly improved compared to October’s +2.9 per cent growth performance. Capacity was 14.0 per cent above November 2022 levels.

IATA Director of Policy and Economics Andrew Matters mentioned that the industry’s passenger load factor is approaching its 2019 level, supporting the financial recovery of the airlines.

Projected profits for aviation industry in 2024

According to the association’s data, airline operating profits are projected to increase from $40.7 billion in 2023 to $49.3 billion this year. According to Walsh, these projections reflect the industry’s resilience and the enduring popularity of air travel.

“People love to travel, and that has helped airlines come roaring back to pre-pandemic levels of connectivity,” he said.

“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.”

Global revenue passenger kilometers (RPK), defined as the kilometers traveled by paying passengers, are expected to grow by 9.8 per cent in 2024, reaching 4.5 per cent above 2019 levels.

“The global passenger travel recovery is encouraging, despite the continuing macroeconomic uncertainties and current geopolitical situation,” said chief financial officer at aviation gateway services provider Sats, Manfred Seah.

He highlighted a trend of discretionary spending going to services such as food and beverage, entertainment and tourism, rather than material goods.

See also  Naomi Osaka Praises Cordae For Helping Make Parenting Easy

IATA Outlook Drivers

Overall revenues in 2024 are expected to rise faster than expenses (7.6 per cent vs. 6.9 per cent), strengthening profitability. While operating profits are expected to increase by 21.1 per cent (from $40.7 billion in 2023 to $49.3 billion in 2024), net profit margins are projected to grow at less than half the pace (10 per cent).

This slower growth is largely attributed to the anticipated increase in interest rates in 2024.

In terms of revenue, industry revenues are projected to reach a historic high of $964 billion in 2024. An inventory of 40.1 million flights is expected to be available in 2024, surpassing the 2019 level of 38.9 million and increasing from the 36.8 million flights anticipated in 2023.

Passenger revenues are forecasted to reach $717 billion in 2024, marking a 12 percent increase from $642 billion in 2023. The growth in revenue passenger kilometers (RPKs) is expected to be 9.8 per cent year on year. Although this is more than double the pre-pandemic growth trend, 2024 is anticipated to signify the end of the dramatic year-on-year increases characteristic of the recovery observed in 2021-2023.

The persistent high demand for travel, coupled with limited capacity due to ongoing supply chain issues, continues to create supply and demand conditions supporting yield growth. Passenger yields in 2024 are expected to improve by 1.8 per cent compared to 2023.

Highlighting the tight supply and demand conditions, efficiency levels remain high, with the load factor expected to be 82.6 per cent in 2024. This is a slight improvement from 2023 (82 per cent) and is consistent with the levels observed in 2019.

The post IATA signals a vibrant comeback for aviation in 2024 appeared first on The Independent Uganda:.

See also  Anti-climax As Silverbacks Fall To Libya In Afrobasket Qualifiers

Author

Leave A Reply

Your email address will not be published.