Main Takeaways
Table 1. Net profit per passenger, USD
Lower oil prices and airlines’ profit
Lower oil prices will help reduce costs for airlines, which would be most welcome as airlines’ net profits are expected to be limited to around 3% in 2024. Lower fossil fuel costs can enable some airlines to invest in decarbonization solutions directly and allow them to gain greater control over their destiny rather than being the final consumers and likely price-takers (as opposed to price-setters) of such solutions.
Air passenger traffic
Over the past year, the global economy has been remarkably stable. Unemployment rates in OECD countries were below historical averages, global inflation rates continued to fall, and ticket prices moderated, fueling demand. Of course, uncertainties persist because of wars, and the policy shifts that the new US administration likely imply. As for the approaching end of 2024, demand for air travel is not only strong, but has set a new all-time high.
This buoyant aviation activity has pushed industry‑wide passenger traffic to new record highs in spite of capacity constraints in 2024. The growth in RPK and ASK have aligned with the trend observed in the decade leading up to the pandemic (see chart). In the near future, the rise in passenger traffic is expected to follow this trajectory, supported by persistent demand and the expansion of airline operations in key emerging economies. Supply chain issues, however, could cap the potential growth in traffic, as passenger load factors reached all-time highs across the different regions and at the industry level, while in 2024, the rise in RPK matched that in ASK.
Industry Revenue Passenger-Kilometers (RPK) and Available Seat-Kilometers (ASK), seasonally adjusted
Air cargo traffic
Airlines are projected to achieve an all-time high in cargo tonne-kilometers (CTK), with demand expected to increase by an impressive 11.8% YoY in 2024. This remarkable growth follows two consecutive years of declining air cargo volumes as the industry adjusted after the exceptional pandemic peak (see chart).
The surge in demand has been primarily driven by robust cross-border e-commerce and, to a lesser extent, capacity limitations in ocean shipping. Given these strong growth catalysts, along with a relatively positive macro-economic outlook, demand is expected to continue to rise significantly in 2025.
The expansion in air cargo traffic is supported by all regions, with YTD growth rates ranging from 6% to 16%. The strongest rise has been observed among airlines registered in the Middle East and Asia Pacific. In addition to the influence of e-commerce and of ocean shipping disruptions, some of these airlines also benefit from unrestricted access to Russian airspace.
Global seasonally adjusted ACTK and CTK, billion, 1990-2024 (until September 2024)
Airline financial performance
2024 has remained a strong year in the global airlines industry despite declining yields and significant cost pressures. The 2024 numbers are also affected by our upward revision of the profitability in 2023, a year that turned out to be exceptionally strong – actually the fourth best in 30 years. Moreover, 2023 was the first year after the pandemic when capacity utilization and load factors were restored to pre-pandemic levels, bringing the unit cost down with them. The estimated operating margin for 2024 is 6.4%, which is 3 percentage points above the 20-year median (see chart).
Costs have risen across all non-fuel areas. Following the remarkable profit recovery in 2023, airlines faced demands for salary increases, exacerbated by persistent labor shortages. Other costs have been impacted by supply chain issues, in turn limiting capacity expansion.
Global airline operating profit in USD billion and operating margin, as % of revenue
Source: https://www.iata.org/en/publications/economics/reports/global-outlook-december-2024/
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