During the International Air Transport Association’s Annual General Meeting in Dubai, the association projected the world’s airlines will make $30.5 billion in net profit this year from a record $996 billion in revenues. Passenger numbers will also set a record with 4.96 billion people expected to travel by air.

“The human need to fly has never been stronger,” said Willie Walsh, IATA’s Director General. “Moreover, the global economy counts on air cargo to deliver the $8.3 trillion of trade that gets to customers by air.”

While marking the projections as “a major achievement” in terms of the pandemic recover, Walsh focused on the modest airline margin of just over 3%, with expenses reaching a record high of $936 billion.

“Importantly, flying remains good value for money,” Walsh said. “77% of the 6,500 travelers we recently polled in 15 markets said as much. That’s not surprising considering that the real cost of air travel has fallen 34% over the last decade. For all the value airlines create, how much profit do they retain per passenger? $6.14. To translate into the coffee benchmark that has become an AGM tradition, that buys one single espresso in this hotel’s coffee shop.”

North American airlines continue to outperform their global peers, and are expected to make $14.8 billion in net profit at an average of $13.10 in profit per passenger.

As IATA reports, “North America continues to be the most significant contributor to industry profits, supported by a high passenger load factor, robust yields, and strong consumer spending despite cost-of-living pressure. In 2024, passenger demand (RPK growth of 7%) and a strong load factor at 84% are expected to strengthen revenue development and operating profitability. Canada is seeing slower growth in traffic and greater wage pressure than the U.S. market.”

Walsh addressed the critical gap in the supply of aircraft and parts, saying, “To improve profitability, resolving supply chain issues is of critical importance so we can deploy fleets efficiently to meet demand.”

The association expects airlines will make 38.7 million flights available this year 2024, 1.4 million flights fewer than projected in December 2023. The reduction is mostly due “to the slowing pace of deliveries in the face of persistent supply chain issues in the aerospace sector.” Airlines now expect 1,583 aircraft deliveries scheduled for 2024, which is 11% fewer than the 1,777 aircraft had previously projected. “Airlines are deploying larger aircraft as a mitigating strategy,” the association stated.

Facing challenges on the sustainability of the industry, with some governments imposing new rules and limits and accusing airlines of greenwashing, Walsh highlighted that “aviation is vital to the ambitions and prosperity of individuals and economies.” He added that profitability enables airlines to invest in better products for their customers and “the sustainability solutions we will need to achieve net zero carbon emissions by 2050.”

Walsh called on governments to provide “relief from the parade of onerous regulation and ever-increasing tax proposals” and to focus on “public policy measures that drive business competitiveness” arguing this “would also place us in a strong position to accelerate investments in sustainability.”

IATA’s Director General also pledged to continue pushing on Sustainable Aviation Fuel, which airlines argue is essential to meeting their environmental targets but which is in too short supply and too expensive to significantly replace fossil-based jet fuel.

“Considering that SAF production will equal slightly more than 0.5% of our fuel needs this year, achieving a 5% emissions reduction through SAF by 2030, a target agreed by ICAO, is very ambitious,” Walsh said.

“Having agreed that target—and please it is important to remember that it is a governments target, not ours—we therefore expect governments to help make it possible. To be blunt, governments must deliver concrete measures to facilitate the exponential ramp-up of SAF they are calling for—while not forgetting all the other decarbonization measures that are needed.”

Article source: https://airlines.einnews.com/article/716764959/m118Y1FSfPu99GFZ?ref=rss&ecode=vaZAu9rk30b8KC5H

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