The airline industry’s dramatic climb from the depths of the pandemic could also be ending soon.
A review of multiple reports shows stabilization across several key metrics, as rapid growth ends and a latest era of normalcy begins.
“2024 is anticipated to mark the tip of the dramatic year-on-year increases which have been characteristic of the recovery in 2021-2023,” a December report by the International Air Transport Association said.
Global flight capability is anticipated to be restored, with some 40 million flights (up from 38.9 million in 2019) projected to hold a record 4.7 billion people (up from 4.5 billion people in 2019), in accordance with IATA. Â
As leisure travel demand softens and “revenge travel” ends, supply and demand within the industrial airline industry is hitting an equilibrium, which is able to help stabilize airfares in 2024, in accordance with AMEX GBT Consulting.
Airfares: what to anticipate in 2024
Global airfares are expected to rise between 3%-7% next 12 months, as airlines grapple with high fuel costs, sustainability changes and fleet upgrades, in accordance with the FCM Consulting’s “Global Trend Report” for the third quarter of 2023.
Nonetheless, several other reports expect flight prices to melt.
The travel arrangements company BCD Travel expects global fares to drop next 12 months, but just barely — lower than 1% in comparison with 2023 — with a more pronounced drop in airfares to and from Asia (3% for business class, nearly 4% for economy), in accordance with its “Travel Market Report 2024 Outlook.”
“After recent rises in fares, we must always expect a modest price correction in some markets in 2024, although underlying pricing should generally remain strong,” it said.
Nonetheless, AMEX’s “Air Monitor 2024” is expecting only international airfares to drop in 2024 — notably for flights between North America and Asia. The report states regional fares will remain stable or barely increase.
We must always expect a modest price correction in some markets in 2024.
BCD Travel
Travel Market Report 2024 Outlook
Travelers within the U.S. may even see some savings. The travel company Hopper expects fares within the U.S. to drop — at the least for the primary six months, in accordance with its “2024 Travel Outlook” report.
Overall, passengers shouldn’t expect much change in 2024, says John Grant, chief analyst on the travel data company OAG.
“There will probably be a continuation of the establishment, with only minor fluctuations in fare prices,” he said. “Although we may even see a slight shaving of fares as demand softens within the very low season, the basics of a high operating costs base remain [plus] increased salaries, oil prices etc. suggest that we are going to not see much of a shift.”
Who’s winning the recovery race?
Industrial airlines in three regions are expected to be profitable in 2023, in accordance with IATA:
- North America: stays the “standout region” and first to return to profitability in 2022
- Middle East: strong financial performances expected in 2023 and 2024
- Europe: a robust end expected for 2023 despite ongoing war and conflict in Ukraine and Gaza
IATA projects that yet another region will turn into profitable in 2024:
- Asia-Pacific: despite the complete return of international Chinese travelers, domestic travel within the region, especially in India and China, remain strong
And two are expected to stay “within the red” at the tip of 2024:
- Latin America: held back by economic and social turmoil, despite a robust showing from Mexico
- Africa: thwarted by financial, infrastructure, and connectivity issues
Outlook for 2024
Many airlines reported record earnings in 2023 but “the landscape could look less favorable in 2024,” in accordance with AMEX’s Air Monitor 2024. Â
Global economic growth last 12 months, within the face of high inflation and high rates of interest, could have occurred because of a delay, moderately than a scarcity, of market response, in accordance with BCD Travel’s report.
“The transmission into the broader economy of the subduing effects of policy tightening has simply taken longer than economists had expected,” it states.
The report outlined other pressures facing the industry, including geopolitical problems, supply chain issues, staffing shortages, and rising fuel and labor costs.
Nonetheless, several tailwinds may bolster the industry this 12 months, including the long-awaited return of business travel, which is anticipated to select up in 2024.
Projections by IATA show industry revenues and profits are expected to extend in 2024.
People like to travel and that has helped airlines to return roaring back to pre-pandemic levels of connectivity.
Willie Walsh
IATA’s Director General
The association expects global revenues to achieve a record-making $964 billion dollars next 12 months, with net profits of $25.7 billion, it said.
This may be a 2.7% net profit margin — a slight increase from the two.6% profit margin expected for 2023, the report said.
Nonetheless, IATA also stated that the industry faces considerable challenges, from customer competition and high operating costs to government regulations.
“People like to travel and that has helped airlines to return roaring back to pre-pandemic levels of connectivity,” IATA’s Director General Willie Walsh said within the report.
Nonetheless, “industry profits should be put into proper perspective. While the recovery is impressive, a net profit margin of two.7% is way below what investors in almost another industry would accept.”
