KARACHI: The International Airline Transport Association (IATA) is expected to stabilize profits in 2024, as the continued growth in post-pandemic travel is offset by the high cost of capital and capacity constraints, ARY News reported on Friday, citing IATA report.
According to the IATA report, the global airline industry has majorly recovered from the COVID-19 pandemic, as the demand boomed across North America, the Middle East, and Europe in the post-pandemic period.
The report indicated that the airline sector returned to profitability in 2023, with net profit expected at $23.3 billion on a 2.6 percent margin, and is set to reach $25.7 billion and a margin of 2.7 percent in 2024.
However, the revenues are tipped to reach a record of $964 billion, and the high cost of capital which has to be collected by rising interest rates remains the main concern for the airline sector.
The IATA’s head, Willie Walsh, emphasized that, on average, airlines will retain only $5.45 per passenger, drawing a comparison to the cost of a basic grande latte at a London Starbucks.
Despite these financial challenges global travel is poised to reach historic levels, with an estimate of 4.7 billion travelers in 2024 compared to 4.5 billion in 2019.
The report further indicated that many countries faced delays in the travel recovery, such as China – Where international travel is still 40 percent below the pre-pandemic levels – are projected to turn a profit in 2024.
In the report, the IATA officials warn about the negative impact on the airline sector due to the rising price of oil as well as global instability – including the Israel-Hamas war and the Ukraine War.
However, the Jet fuel prices are expected to constitute 31 percent of all airline operating costs
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