Airlines reportedly amassing historic income of $1 trillion for the first time ever.
The International Air Transport Association (IATA) forecasts that airlines' average profit per passenger will soar to approximately $7 next year, marking a significant jump from the $2.25 recorded 18 months prior. This year, the projected per-passenger profit stands at $6.40.
The data represents a remarkable turnaround for an industry that registered three successive years of losses worth nearly $187 billion between 2020 and 2022 due to the pandemic.
The resurgence in travel demand, which surged considerably post the relaxation of travel restrictions during the Covid era, has catalyzed the airline sector's profits and enabled certain airlines to hike ticket prices.
anticipates Middle Eastern airlines to lead the profitability rankings next year, with an estimated profit per passenger of $24, followed by US airlines with $12 and European airlines with $9. IATA predicts airlines in Africa, Latin America, and the Asia-Pacific region to underperform compared to the industry average.
IATA director general, Willie Walsh, lauded the substantial revenue figure, stating it as "wonderful news." However, he acknowledged that overall industry net profitability would still be "minuscule," anticipated to be $36.6 billion—a figure not bolstered by delays in aircraft deliveries from prominent manufacturers like Airbus and Boeing (BA).
Walsh shared concerns about how supply chain issues impact the industry's expenses drastically. He explained that the severe airplane shortage causes older, less fuel-efficient aircraft to remain in service for an extended period, leading to heightened operational costs and damage to the environment.
Additionally, global conflicts result in restricted airspace, forcing airlines to opt for lengthier routes and are liable to cause delays due to scarcer airspace availability for the rising number of flights.
According to IATA, the political change in the US could impede the airline industry's pursuit of net-zero carbon emissions by 2050.
Walsh warned that the industry-wide benefits established under the Biden administration might not persist under the Trump administration, citing as an example the existing tax incentives for sustainable aviation fuel production under the Inflation Reduction Act.
Aviation contributes about 2.5% to global carbon emissions, according to Our World in Data. Scientists suggest that universal greenhouse gas emissions need to decrease to zero on a net basis by 2050 to prevent global warming from exceeding 1.5 degrees Celsius.
Also on Tuesday, Alaska Air Group, which operates Alaska Airlines and Hawaiian Airlines, announced its intent to commence services between Seattle and Tokyo and Seoul for the first time next year. The group, which acquired Hawaiian's parent company in September, aims to add an additional $1 billion in profit to the combined entity by 2027.
The promising financial forecast for airlines has sparked renewed interest in the business sector, attracting potential investors looking to capitalize on this upward trend.
Despite the expected profit increase, IATA expresses concerns about certain challenges, such as delays in aircraft deliveries and the potential impact of political changes on the pursuit of net-zero carbon emissions.
