The global representative body for the airline industry, the International Air Transport Association (IATA), has forecast that African airlines will enjoy a higher net profit margin this year than they did last year. The figures were released at the IATA AGM, in Dubai.
The association predicted that African carriers would record a net profit of $0.1-billion this year. While this was in the same ball park as the figure for last year (also given as $0.1-billion), this year they would achieve a net profit margin of 0.6%, as against an estimated 0.4% for last year. Net profit per passenger was forecast to be $0.90 for this year, as against the $0.50 estimated for last year.
African airlines would also see an 8.5% increase in passenger demand this year, IATA foresaw. African airline capacity would increase by 9.1%.
“Africa has a high operational cost base and a low propensity to spend on air travel,” noted the association. “Moreover, connectivity challenges dampen the industry’s expansion and performance. Despite these headwinds, there is sustained demand for air travel, which should allow the market to deliver a second year of profitability.”
Globally, 2023 was a better year for airline profitability than IATA had expected, when it issued its last outlook, in December. The industry body now expected global airline revenues for last year to total $908-billion, which was $12-billion higher than its previous forecast. However, airline expenses also grew more than predicted, being $1-billion higher, taking the estimated total now to $856-billion.
Nevertheless, the result was that the airline industry was estimated to have achieved a global net profit of $27.4-billion last year, which was $4-billion more than in the December forecast. This brought 2023’s industry-wide net profit margin to 3%, whereas the December prediction had been 2.6%.
“Air travel continues to deliver value to consumers,” affirmed IATA. “IATA’s April 2024 public opinion poll revealed that 97% of travellers expressed satisfaction with their travel. Moreover, 91% agreed that connectivity by air is critical for the economy and 89% said it has a positive impact on societies.”
Other results from the poll were that 86% of respondents stated that it was easy to justify expenditure on business travel; 77% said that air travel was good value for money; 90% agreed that air travel was a necessity, today; and, 83% realised that the worldwide air transport network was a crucial element in achieving the UN Sustainable Development Goals.