IATA Adjusts 2024 Airline Profitability Forecasts, predicts $120 billion drop in cargo revenue

Based on IATA’s projections, airlines are expected to see a drop in their cargo revenues from $138 billion in 2023 to $120 billion in 2024. Both numbers are significantly lower than the 2021 peak of $210 billion but higher than the 2019 revenues of $101 billion. This is an improvement from the previous forecast of $111 billion announced in December 2023.

Moreover, airlines’ cargo yields are expected to fall 17.5% in 2024, slightly above 2019 levels, despite the strength of cargo demands this year.

According to an official release by IATA, this reflects a return to normal levels after the exceptional highs experienced during the pandemic. IATA also mentions that a key factor in this development is the considerable increase in cargo capacity following the recovery of passenger travel in 2023.

“In general, air cargo is in a period of correction following an exceptional year in 2021. Yields, capacity growth, the belly-dedicated freighter split, and other key metrics are moving from the extraordinary mid-pandemic situation towards a continuation of pre-pandemic trends and levels,” states the official release.

“The global economy counts on air cargo to deliver the $8.3 trillion of trade that gets to customers by air. Without a doubt, aviation is vital to the ambitions and prosperity of individuals and economies. Strengthening airline profitability and growing financial resilience are important. Profitability enables investments in products to meet the needs of our customers, and in sustainability solutions we will need to achieve net zero carbon emissions by 2050,” said Willie Walsh, Director General, IATA.

According to the IATA report, based on responses from around 330 airlines comprising 80% of global air traffic, aviation revenues are expected to reach a historic high of $999 billion this year, with passenger revenues expected to reach $744 billion in 2024. The report found that passenger revenues are up 15.2% from $646 billion in 2023. Passenger yields are also expected to strengthen by 3.2% over 2023. Industry expenses are projected to hit $936 billion in 2024, with fuel costs being a major concern

Despite challenges, there’s optimism for the future. “The airline industry is on the path to profitability,” says industry leader Walsh, “but there’s work to be done.” The current return on investment (5.7%) falls short of the industry’s cost of capital (over 9%), and profits per passenger are slim—below barely enough for a cup of coffee in some places.

So, what’s the key to unlocking greater profitability? According to Walsh, resolving supply chain issues is crucial to efficiently deploy fleets and meet demand. Additionally, reducing burdensome regulations and ever-increasing taxes would be a welcome relief.

Public policies that support competitiveness would benefit the economy, jobs, and global connectivity, while also enabling airlines to invest more in sustainability.