The International Air Transport Association (IATA) has recently raised its profit forecast for the airline industry in 2024. It predicts a record high revenue of $996 billion, marking a significant 9.7% increase from the previous year. This positive outlook was announced during the IATA Annual General Meeting held in Dubai.
While the industry is poised for growth in terms of revenues and profits, it is facing challenges in terms of expenses. The report mentions that total expenses for global airlines are expected to reach $936 billion in 2024, representing a 9.4% annual increase and a record high. This surge in expenses is resulting in thin profit margins for airlines, with return on invested capital projected at 5.7%, which is significantly below the average cost of capital.
Willie Walsh, the director general of IATA, highlighted the need for addressing supply chain issues that have plagued the industry for years. He also called for relief from what he referred to as “the parade of onerous regulation and ever-increasing tax proposals.” According to Walsh, more business-friendly policies would not only help in overcoming these challenges but also accelerate investments in sustainability.
One of the key issues facing the airline industry is its impact on the environment. Airlines are responsible for approximately 3% of global carbon emissions, and there is a growing emphasis on the need for the industry to achieve net-zero carbon emissions by 2050. However, this goal is being met with skepticism from environmental experts and scientists.
While the airline industry is experiencing positive growth in terms of revenues and profits, it is also grappling with rising expenses and thin profit margins. Addressing supply chain issues, advocating for more business-friendly policies, and advancing sustainability efforts are crucial for the industry to achieve sustainable profitability in the long run.