Business

Airlines set to soar with $25.7b profit as traffic exceed pre-Covid levels

Tuesday, January 9th, 2024 02:15 | By
Willie Walsh, IATA’s Director General
Willie Walsh, IATA’s Director General. PHOTO/Print

Global airline industry is set to rake in $25.7 billion (Sh4.06 trillion) profit in 2024 as international travel trips finally exceed pre-pandemic levels, experts say.

They said the high profit margins will be supported by some 4.7 billion people who are expected to travel during the year. “Some 4.7 billion people are expected to travel in 2024, a historic high that exceeds the pre-pandemic level of 4.5 billion recorded in 2019,” said International Air Transport Association (IATA), the international trade body of the world’s airlines.

Batch of visitors

The disclosure came as Kenya in the new year welcomed the first batch of visitors under the new State policy of visa free entry. According to Willie Walsh (pictured), IATA’s Director General, cargo volumes are expected to be 58 and 61 million tonnes in 2023 and 2024, respectively, adding: “These projections reflect the industry’s resilience and the popularity of air travel.”

In a groundbreaking development, President William Ruto declared that the free visa policy will be implemented starting this month.

With the removal of visa requirements, travellers instead utilise an Electronic Travel Authorisation (ETA) available via a dedicated online platform.

This change aims to streamline the entry process, offering a faster and more efficient experience by removing the need for physical paperwork, appointments, and the potential for delays.

Kenya’s economy heavily relies on its tourism sector, known for its stunning Indian Ocean beaches and wildlife safaris. The new visa-free policy is therefore expected to boost the tourism industry by making the country more accessible to international travelers.

According to Bryan Obala, Kenya Association Travel Agents senior official, at least 2024 will be a banner year for airline profits, noting that the industry made a dramatic recovery in 2022 and 2023, bouncing back from record pandemic-era losses to near-2019 levels.

IATA Director Policy and Economics Andrew Matters said industry passenger load factor is nearing its 2019 level, which is supporting the financial recovery of the airlines.

According to the association’s data, airline operating profits will rise from $40.7 billion in 2023 to $49.3 billion in 2024. According to Walsh, these projections reflect the industry’s resilience and the popularity of air travel.

“People love to travel and that has helped airlines to come roaring back to pre-pandemic levels of connectivity,” he said.

 “The speed of the recovery has been extraordinary; yet it also appears that the pandemic has cost aviation about four years of growth. From 2024, the outlook indicates that we can expect more normal growth patterns for both passenger and cargo.”

Global revenue passenger kilometres (RPK) defined as kilometres travelled by paying passengers, is expected to grow 9.8 per cent in 2024, rising to 4.5 per cent above 2019 levels.

Manfred Seah, chief financial officer at aviation gateway services provider Sats, said: “The global passenger travel recovery is encouraging, despite the continuing macroeconomic uncertainties and current geopolitical situation.”

He highlighted a trend of discretionary spending going to services such as food and beverage, entertainment and tourism, rather than material goods.

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