The International Air Transport Association (IATA) has upgraded its profitability projections for airlines in 2024, with net profits expected to reach $30.5 billion, an increase from $27.4 billion in 2023. The surge in profitability is driven by record-high traveler numbers and revenues, with a new record number of passengers expected to fly in the U.S. this summer. The total global number of travelers for the year is forecasted to reach approximately 5 billion, with revenues projected to soar to $996 billion, a 9.7% increase from 2023.
The recovery in travel has been remarkable, with domestic travel returning to pre-pandemic levels by the spring of 2023 and international routes surpassing 2019 numbers. The IATA expects the number of world passengers to grow by an average of 3.8% per year over the next 20 years, resulting in over 4 billion additional passenger journeys by 2043. The human need to fly has never been stronger, according to IATA’s Director General, Willie Walsh.
While leisure travel has been leading the recovery, business travel is steadily gaining momentum, though at a slower rate. The Global Business Travel Association (GBTA) predicts global business travel spending will surpass $1.5 trillion in 2024, up from $1.02 trillion in 2022. Corporations are prioritizing domestic trips over international travel, with business travel spending on the rise. However, hotel forecast downgrades reflect lower-than-expected performances in early 2024 and reduced growth projections for the rest of the year.
In China, outbound travel is making a comeback, with the travel and tourism sector predicted to contribute a record-breaking 12.62 trillion yuan ($1.7 trillion) by the end of the year. Domestic travel spending in China is also expected to reach new heights, providing a significant boost to the luxury market. Chinese shoppers, who were major luxury spenders before the pandemic, are gradually returning, with domestic luxury spending up by 50%, according to Bloomberg Intelligence. This resurgence is encouraging for long-term luxury investments in mainland China and Europe.
The services sector, including the airline industry, has seen a marked improvement according to the S&P Global US Services PMI, which rose to a one-year high of 54.8 in May. This indicates a rapid expansion in services activity driven by strong consumer demand and business confidence. The airline industry is well-positioned for sustained growth, with strong profitability projections, ongoing recovery in both leisure and business travel, and positive market dynamics. The rebound in Chinese travel and its impact on the luxury market further support the sector’s growth prospects.
