The airline industry’s dramatic rise from the depths of the pandemic may soon end.
A review of several reports shows stabilization in several key metrics as rapid growth ends and a new era of normality begins.
“2024 is expected to mark the end of the dramatic year-on-year increases that characterized the recovery in 2021-2023,” said a December report by the International Air Transport Association.
Global flight capacity is expected to recover, with about 40 million flights (up from 38.9 million in 2019) projected to carry a record 4.7 billion people (up from 4.5 billion in 2019), according to IATA.
As demand for leisure travel declines and “revenge trips” end, supply and demand in the commercial airline industry are in balance, which should help stabilize airfares in 2024, according to AMEX GBT Consulting.
Airline tickets: what to expect in 2024
Global air fares are expected to rise between 3%-7% next year as airlines grapple with high fuel costs, sustainability changes and fleet upgrades, according to FCM Consulting’s “Global Trends Report“for the third quarter of 2023.
However, several other reports expect flight prices to drop.
Travel arranger BCD Travel expects global fares to fall next year, but only slightly – less than 1% compared to 2023 – with a sharper drop in air fares to and from Asia (3% for business class, almost 4% for the economy). , in accordance with “Travel Market Report 2024 Outlook.”
“Following recent fare increases, we should expect a modest price correction in some markets in 2024, although underlying prices should generally remain strong,” it said.
However, AMEX “Air Monitor 2024” only expects international fares to decline in 2024 — particularly for flights between North America and Asia. The report says regional fares will remain flat or increase slightly.
We should expect a moderate price correction in some markets in 2024.
Travel BCD
Travel Market Report 2024 Outlook
US travelers may see some savings. Travel company Hopper expects U.S. fares to drop — at least for the first six months, according to2024 Travel Outlook” report.
Overall, passengers shouldn’t expect much change in 2024, says John Grant, chief analyst at travel data firm OAG.
“There will be a continuation of the status quo, with only minor fluctuations in fare prices,” he said. “While we may see a slight reduction in fares as demand declines in the very low season, the fundamentals of a high operating cost base remain [plus] Increased wages, oil prices, etc. suggest we won’t see much change.”
Who is winning the recovery race?
Commercial airlines in three regions are expected to be profitable in 2023, according to IATA:
- North America: remains the ‘standout region’ and the first to return to profitability in 2022
- Middle East: strong economic performance is expected in 2023 and 2024
- Europe: A strong finish is expected for 2023 despite ongoing war and conflict in Ukraine and Gaza
IATA predicts that one more region will become profitable in 2024:
- Asia-Pacific: despite the full return of international Chinese travelers, domestic travel to the region, especially to India and China, remains strong
And two are expected to remain in the red at the end of 2024:
- Latin America: held back by economic and social turmoil, despite a strong showing from Mexico
- Africa: held back by economic, infrastructure and connectivity issues
Outlook for 2024
Many airlines reported record profits in 2023, but “the landscape could look less favorable in 2024,” according to AMEX’s Air Monitor 2024.
Global economic growth last year, in the face of high inflation and high interest rates, may be due to a lag rather than a lack of market reaction, according to the BCD Travel report.
“The transmission of the dampening effects of policy tightening to the broader economy simply took longer than economists expected,” it says.
The report outlined other pressures facing the industry, including geopolitical problems, supply chain issues, staff shortages and rising fuel and labor costs.
However, several tailwinds may boost the industry this year, including the long-awaited return of business travel, which is expected to strengthen in 2024.
IATA forecasts show that industry revenues and profits are expected to increase in 2024.
People love to travel and this has helped airlines return to pre-pandemic levels of connectivity.
Willie Walsh
Director General of IATA
The association expects global revenue to hit a record $964 billion next year, with a net profit of $25.7 billion, it said.
That would be a net profit margin of 2.7 percent — a slight increase from the 2.6 percent profit margin expected for 2023, the report said.
But IATA also said the industry faces significant challenges, from customer competition and high operating costs to government regulations.
“People love to travel and this has helped airlines return to pre-pandemic levels of connectivity,” IATA director general Willie Walsh said in the report.
However, “industry earnings need to be put into perspective. While the recovery is impressive, a net profit margin of 2.7% is well below what investors would accept in almost any other industry.”