Airlines's profits are projected to stabilise in 2024 despite net profitability remaining well below the cost of capital, according to International Air Transport Association (IATA)
Industry players predict that the global aviation sector will make $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, says that the high profit margins will be supported by some 4.7 billion people who are 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,” said IATA).
According to leisure travel demand is softening and “revenge travel” ending.
This it says will see supply and demand in the commercial airline industry hit an equilibrium, which will help stabilise airfares in 2024.
Kenya has already announced plans to tap on the 4.7 billion travellers with the removal of visa requirements.
It's economy heavily relies on the tourism sector,and the new visa-free policy is expected to boost the tourism industry by making the country more accessible to international travellers.
According to IATA’s Director General Willie Walsh, cargo volumes are expected to hit 61 million tonnes in 2023 from 58 million tonnes in 2023.
“These projections reflect the industry’s resilience and the popularity of air travel going forward,” said Walsh
IATA Director Policy and Economics Andrew Matters said industry passenger load factor is nearing its 2019 level, which is supporting the financial recovery of the airlines.
According to the association’s data, airline operating profits will rise from $40.7 billion in 2023 to $49.3 billion in 2024. According to Walsh, these projections reflect the industry’s resilience and the popularity of air travel.
“People love to travel and that has helped airlines to 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 kilometres (RPK) defined as kilometres travelled by paying passengers, is expected to grow 9.8 per cent in 2024, rising to 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.