International Air Transport Association (IATA) director general Willie Walsh looks on during the IATA Global Media Day in Geneva, on Dec 6, 2023. (PHOTO / AFP)
GENEVA - Airline profits are set to stabilize in 2024 as continued growth in post-pandemic travel is offset by the high cost of capital and capacity constraints, industry group IATA said on Wednesday.
The global airline sector has largely recovered from the COVID-19 pandemic, which saw planes grounded and travelers reluctant to fly, as demand has boomed across North America, the Middle East and Europe.
The airline sector returned to profitability in 2023, with net profit expected at $23.3 billion on a 2.6 percent margin, and is set to reach $25.7 billion and a margin of 2.7 percent next year the International Air Transport Association said
The airline sector returned to profitability in 2023, with net profit expected at $23.3 billion on a 2.6 percent margin, and is set to reach $25.7 billion and a margin of 2.7 percent next year, the International Air Transport Association (IATA) said.
But while revenues are tipped to reach a record $964 billion, the high cost of capital driven by rising interest rates is troubling, the global body said.
"Industry profits must be put into proper perspective," IATA's head Willie Walsh said.
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"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."
Still, the number of travelers globally is set to climb to historic levels, with 4.7 billion people expected to travel in 2024 compared with 4.5 billion in 2019.
Global instability, including the Israel-Hamas conflict and the Ukraine crisis, could negatively impact the sector, the industry body warned, especially as they continue to drive up oil prices.
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Jet fuel prices are expected to account for 31 percent of all airline operating costs.
