2024 Comment on Aviation & Travel. A good News Story!

I wanted to offer some comment on the travel and aviation markets looking back at 2023 and forward to 2024.

IATA announced strengthened profitability projections for airlines in 2023, which will then largely stabilize in 2024. However, net profitability at the global level is expected to be well below the cost of capital in both years. Very significant regional variations in financial performance remain.

According to IATA’s most recent forecasts, the airline industry net profits are expected to reach $25.7 billion in 2024 (2.7% net profit margin). That will be a slight improvement over 2023 which is expected to show a $23.3 billion net profit (2.6% net profit margin).*

By anyone’s standards these numbers are remarkable considering airlines globally lost over $168 billion in 2020 alone!

IATA also forecasts airline industry operating profits are expected to reach $49.3 billion in 2024 from $40.7 billion in 2023 and total revenues in 2024 are expected to grow 7.6% year over year to a record $964 billion.

Some 4.7 billion people are expected to travel in 2024, an historic high that exceeds the pre-pandemic level of 4.5 billion recorded in 2019. I remember talking with C-Suite executives in large middle eastern airlines this summer and both said that they did not have enough capacity to meet demand, and that 2024 was already showing similar demand!

Cargo volumes are expected to be 58 and 61 million tonnes in 2023 and 2024, respectively.

“Considering the major losses of recent years, the $25.7 billion net profit expected in 2024 is a tribute to aviation’s resilience. People love to travel and that has helped airlines to come roaring back to pre-pandemic levels of connectivity. 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,” said Willie Walsh, IATA’s Director General.

It is clear that the travel sector will have another bumper year in 2024. All forms of travel are on the increase. Whilst rail is currently more expensive than flying for international journeys in Europe, Europe’s Rail Action Plan, combined with changes to the Trans-European Transport Network (TEN-T) to increase high-speed rail capacity and new European Investment Bank (EIB) support for investment in rail, are paving the way for “a real renaissance in rail”, according to the commission. It is part of a package of measures aimed at boosting efficient and green mobility to help the EU meet its targets of doubling high-speed train traffic by 2030 and tripling it by 2050 and by default it will bring down prices.

Overall, the short- and medium-term signs for the travel sector are positive. The post Covid thirst for travel even in these ‘cost of living’ crisis times, seems unabated. The medium view is that of building more environmentally friendly infrastructure for rail and the development and commitment by the aviation sector for SAF (sustainable air fuel) gives optimism for the longevity of the industry.

The travel industry at long last has come of age, and can now stand proudly alongside other sectors such as telecoms or pharma as a resilient, long term profitable industry.

Please get in touch if you want to have a confidential conversation regarding your prospective senior hiring requirements in 2024.