Global Outlook for Air Transport
A local sweet spot
December 2023
2 Global Outlook for Air Transport — A local sweet spot
Contents
Global Outlook for Air Transport — A local sweet spot 3
1. Long-term trends are becoming less supportive 4
2. Air transportation is back, but the pace of growth will slow 10
Air passenger trac 10
Air cargo trac 14
3. Airline Financial Performance 16
Overview 16
Revenue development 18
Capital providers 18
Aircraft 19
Labor 20
Fuel 20
Regions 21
Risks 23
3 Global Outlook for Air Transport — A local sweet spot
Global Outlook for Air Transport
A local sweet spot
Main takeaways:
• The global long-term trends that propelled the 20
th
century’s unparalleled economic achievements are if not
in reverse, certainly becoming less supportive. Much of
the 20
th
century’s success was enabled by the expanded
use of fossil fuels. That economic model has passed its
zenith. It will take a successful energy transition to set the
world on a new path towards sustained – and sustainable –
growth and better economic outcomes for all.
• 2023 has been a year when air transportation very nearly
returned to its pre-pandemic pace of activity, and a
year of renewed nancial protability for the industry.
In many ways, 2023 is likely to be a local sweet spot for
the industry, as the same pace of growth and nancial
recovery is unlikely to be matched in 2024 and beyond.
• Industry-wide passenger trac, measured in revenue
passenger-kilometers (RPKs), grew by 40.1% year-on-year
(YoY) through September 2023 and reached 92.9% of
pre-pandemic levels. All regions, except Asia Pacic, are
expected to reach or surpass their 2019 trac levels in
2023. In the long run, global passenger trac looks set to
double by 2040.
• The cargo sector continued to face challenges in 2023,
with a slowdown in demand due to macro-economic
headwinds and a slowdown in global trade. Despite a
decline in cargo tonne-kilometers (CTKs) from 2022 levels,
signs of improvement emerged in the second half of 2023.
Regional variations were observed, with Latin America
achieving annual growth in CTKs, and North America and
Africa surpassing their pre-Covid levels. Overall industry
CTKs are expected to remain below 2022 levels in 2023,
with a forecast 4.5% growth in 2024.
• The industry is returning to protability in 2023, only three
years after the historic loss of nearly USD 140 billion in
2020. This is a stunning performance and a testimony
to the industry’s resilience, adaptability, and hard work.
Total airline revenue is expected to reach 107% of 2019
earnings, with operating prots of USD 41 billion.
• The net prot forecast for the whole industry this year is
USD 23.3 billion. While this is a positive development, the
levels of protability are far from being exceptional. For
some perspective, nearly half this amount was realized
by one single oil company in just the third quarter of this
year, while a large technology company nearly matched
our full-year industry prots in that single quarter. Air
transportation’s net prot margin is a slim 2.6% in 2023,
compared to 11% and 22% for the companies just
mentioned, respectively. Airlines’ prots in 2023 equate
to USD 5.44 per passenger – less than a cup of cold brew
coee in Geneva. While stunningly resilient, our industry is
still lacking in robustness.
• Passengers around the world have clearly voted with
their wallets, showing the world that they deem air
transportation necessary, even in the face of record-high
jet fuel prices in relation to crude oil prices. Passenger
satisfaction is as high as 82% in a survey of 8,000
air travelers
1
, and 91% say that air transportation is
necessary
2
. Our world needs to be connected, and air
transportation is a necessary and indispensable form of
connectivity. The top line development in our industry
shows how important air transportation is, and the
industry has been able to meet expectations, bouncing
back so rapidly from a near total halt.
• However, the industry remains the weakest link in the
aviation value chain and the expected net prots also
reveal its vulnerabilities. In the short term, airlines need to
improve their prot margins and strengthen their balance
sheets after the pandemic. In the longer term, ensuring
air transportation’s access to renewable energy sources
will allow our industry to play its full part in creating a
growing global economy that is sustainable, inclusive, and
equitable.
This semi-annual report takes a broad look at developments in the airline
industry, the context in which it is operating, and the challenges it is facing.
1 IATA 2023 Global Passenger Survey (GPS).
2 IATA Passenger Trends and Insights 2023. The IATA passenger insights survey was conducted 26 April 26-3 May 2023 with a sample of 4,700 recent travelers.
It covers 11 markets (Australia, Canada, Chile, France, Germany, India, Japan, Singapore, UAE, US, and UK). Sample size in each market was 500 apart from Chile,
Japan, Singapore and UAE where it was 300. This Is Motif Ltd prepared the questionnaire and analysis based on data collection and tabulation by Dynata
http://www.thisismotif.com
4 Global Outlook for Air Transport — A local sweet spot
1. Long-term trends
are becoming less supportive
Taking the long view, over up to 100 years, it must be said that
the 20
th
century arguably delivered history’s most stunning
progress in terms of improved economic outcomes globally.
The number of persons living in poverty fell dramatically and
global income distribution became more equitable than ever
before. This was possible thanks to many factors, including
the radical advances in transportation and communications
which brought down the cost of transporting goods and
services around the globe, and facilitated the dissemination
of knowledge and ideas. In the wake of the Second World
War, the rules-based international world order that emerged
along with enduring peace provided the backdrop against
which cross-border activity could ourish. A further enabling
trend was the spread of democracies around the world
and the economic policies frequently associated with this
phenomenon (Chart 1).
From where we currently stand in the 21
st
century, many of the
favorable conditions that contributed to the past century’s
success seem to be waning. Unhelpful long-term trends are
not necessarily driving the business cycle, and economic
performance can still both overwhelm and underwhelm at
any given point in time. However, we will be able to assess the
business cycle’s oscillations with greater clarity if put into the
context of the emerging structural trends.
Political regimes
While not an absolute determinant, economic growth is more
likely to be sustained under democracy than under autocracy
3
.
The share of electoral and liberal democracies in all the world’s
political regimes was as high as 54.3% in 2004, for instance.
It then declined progressively to 50.5% in 2022. Closed and
electoral autocracies made up the remaining 49.5% of the
world’s political regimes.
Conicts
The Uppsala Conict Data Program reports that 2022 saw
the highest number of violent conicts since the Second
World War. State-based conicts number 56, up from a 2010
low of 30. The global economic impact of violence was put
at USD 14.4 trillion in 2020 by the Institute for Economics
& Peace
4
. Applying the observed increase in state-based
conicts to this number, the cost is likely to have exceeded
USD 15 trillion in 2022, or 15% of 2022 nominal world GDP.
In addition to the cost inicted upon warring nations, there is
also the opportunity cost of military spending. World military
spending rose to USD 2.2 trillion in 2022, adjusted for ination,
the highest level ever recorded in SIPRI data, and equivalent to
2.2% of global GDP
5
. That is money that could have covered
more than half of the estimated worldwide annual clean
energy investments needed to deliver the energy transition,
according to the International Energy Agency, not to mention
the benets it could have brought to schools, health systems,
infrastructure, and many more productive areas
6
.
Chart 1: Political regimes
Source: OWID based on Lührmann et al. (2018)
80%
60%
40%
20%
0%
100%
1900
Closed autocracies
Electoral autocracies
Electoral democracies
Liberal democracies
19201910 1930 1940 1950 1970 19901960 1980 2000 2010 2022
3 Patrick A. Imam and Jonathan R. W. Temple, “Political Institutions and Output Collapses”, IMF Working Paper WP/23/36, February 2023.
4 Institute for Economics & Peace, Business & Peace Report 2021: Peace: A Good Predictor of Economic Success, Sydney, May 2021.
5 Nan Tian et. Al., “Trends in world military expenditure, 2022”, SIPRI Fact Sheet, Stockholm International Peace Research Institute, April 2023.
6 “Net Zero by 2050”, IEA, May 2021.
5 Global Outlook for Air Transport — A local sweet spot 1. Long-term trends are becoming less supportive
Navel gazing
These evolutions will as a rule promote more inward-looking
economic policies or force such behavior upon economies
suering conict. Signs that this might be happening can
be found in the decline in the real (ination adjusted) world
exports-to-GDP ratio (Chart 2). This ratio peaked at 103% in
2008 and fell back to 98% in 2022. World trade can of course
slow for many reasons other than the direct impacts of political
regimes and violent conict. Trade uctuates in response to
changes in the composition of trade, slower GDP growth, the
nature of trade regimes, and evolutions in global supply chains,
for instance. These factors too though are themselves often
inuenced by trends in political regimes and armed conicts.
It is noteworthy in this context that the IMF counts nearly 3000
new trade barriers imposed globally in 2022 – a threefold
increase from 1000 such measures taken in 2019
7
.
Turning from trade to capital, the ows of foreign direct
investments (FDI) have been on a downward trend since 2007
and declined by 24% in 2022 compared to 2021 (Chart 3). Both
mergers and acquisitions (M&A) and greeneld investment
projects contribute to the weaker trend in this form of cross-
border activity. Moreover, M&A activity is fairly concentrated in
a handful of countries. Nearly half of total M&A activity in 2022
concerned only ve advanced economies: the UK, the US,
Australia, the Netherlands, and Sweden.
Some of these developments have of course been inuenced
by the Covid pandemic. In the general trend towards more
inward-looking economic policies, the pandemic disrupted
supply chains and exacerbated the fragmentation that we can
observe in both trade and cross-border investment.
Chart 3: Global foreign direct investment ows, USD billion (left) and % of GDP (right)
Source: OECD – Global foreign direct investment ows
2000
1500
1000
500
0
2500 Percent of GDP (RHS)
4.0%
3.0%
2.5%
3.5%
2.0%
1.5%
0%
4.5%
2005 2009 20102007 20082006 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Percent of GDP (RHS)
Chart 2: Real World Exports-to-GDP ratio, indexed (2015 = 100)
Sources: WTO Stats and World Bank World Development Indicators
Note: The ratio is the world export volume index over world GDP in constant 2015 US dollars index
100%
90%
70%
60%
80%
50%
40%
30%
110%
2008
103%
2022
98%
1960 1980 19851970 19751965 1990 1995 2000 2005 2010 2015 2020
7 “The High Cost of Global Economic Fragmentation”, IMF, August 2023.
6 Global Outlook for Air Transport — A local sweet spot 1. Long-term trends are becoming less supportive
Chart 4: Global working age population, % of total population
Source: OECD
65%
64%
63%
62%
60%
59%
61%
58%
57%
56%
66%
1950 198019701960 1990 2000 2010 2020
Fewer of us
Simultaneously, the world is seeing a declining rate of
growth in the working-age population (Chart 4). The average
global GDP growth rate since the 1970s, when the working
population hit a trough, has been around 3%. All other things
being equal, a drop in the working-age population would point
to a lower GDP growth rate going forward. Of course, other
things are rarely equal, and technological progress, coupled
with the drop in transportation costs which accelerated the
dissemination of new technologies, allowed output growth
to outpace population growth since the 1970s. Total factor
productivity, or the ratio of output over the combined inputs
of capital and labor, as well as technology and innovation and
the resulting impacts on eciency, has attened out since the
Global Financial Crisis and is weakening in mature economies
(Chart 5). In this, we can see signs of the weaker investment
and working population trends.
Declining potential GDP growth
All this points to lower potential GDP growth. The US
Congressional Budget Oce estimates the US’ potential
growth rate at 1.8% at the end of 2023, down from 6% in 1952
(Chart 6). The Carnegie Endowment for International Peace
expects China’s long-term growth rate too will be situated in
the vicinity of 2%
8
. In the European Union, the potential growth
rate is likely lower, at around 1.5%, while in Japan it is probably
lower still, at around 1%
9
. Globally, long-term growth might
be just over 2% annually
10
. That is most unfortunate because
of the many challenges that lie ahead, and none of those are
greater than that of climate change.
Climate change
Climate change itself will likely weigh on the potential GDP
growth rate. Worsening climate conditions looks set to reduce
the number of hours worked as well as the eectiveness of
labor
11
. Natural disasters will bring infrastructure costs in
their wake. As many as 376 million persons have been forcibly
displaced since 2008 because of climate events and natural
disasters, with a record 32.6 million people in 2022 alone,
according to the Internal Displacement Monitoring Centre. IEP,
the Institute for Economics & Peace, predicts that 1.2 billion
people could be displaced globally by 2050 due to climate
change and natural disasters. The likely associated increased
social tensions will only reinforce the already discernable
trends of more political and economic fragmentation, capping
economic growth rates further.
105
100
95
110
1995 1999 2003 2007 2011 2015 2019 2023
Chart 5: Total factor productivity(index, 1995 = 100)
Source: Total economy database
5%
6%
1%
2%
3%
4%
0%
7%
1950 55 60 65 70 75 80 85 90 95 2000 05 10 15 202520
Chart 6: US real potential GDP growth rate
Source: Federal Reserve Bank of St. Louis, US Congressional Budget Oce
8 Michael Pettis, “Can China’s Long-Term Growth Rate Exceed 2-3%?”, Carnegie Endowment for International Peace, April 2023.
9 Arsov and Watson, “Potential Growth in Advanced Economies”, Reserve Bank of Australia, December 2019.
10 “Falling Long-Term Growth Prospects: Trends, Expectations, and Policies”, World Bank, March 2023.
11 Dasgupta et. Al., “Eects of climate change on combined labour productivity and supply: an empirical, multi-model study”,
The Lancet Planetary Health, July 2021.
7 Global Outlook for Air Transport — A local sweet spot 1. Long-term trends are becoming less supportive
Restricted policy space
With greater relevance to the current business cycle, this
situation could have been mitigated by expansionary scal
and monetary policies. The room for further scal expansion
is limited given that total global debt (household, corporate,
and government) rose to a new record high of USD 307
trillion in the rst half of 2023, according to the Institute of
International Finance, bringing the global debt-to-GDP ratio
to 336%
12
. General government debt has fallen somewhat in
advanced economies, to 112% of GDP in 2022, from 123% in
2020, though still higher than the 104% of GDP recorded in
2019
13
. In the US, the ratio was 121% in 2022, higher than in
France, Spain, and Portugal, and only 23 percentage points
lower than Italy’s 144%. The number of countries in debt
distress in the world has doubled from 2015 levels, a problem
that could point to local, if not global, nancial instability
14
.
China’s room for scal expansion is also limited, not because
of a high general government debt to GDP ratio, 77% in 2022,
but because total government debt is likely around 140%
of GDP
15
. Moreover, China’s tax system depends upon an
investment-led growth model, reliant on property taxes, that
is no longer delivering the necessary revenue. Tax reform
should be addressed, but this would need to entail new
taxes on households and consumers, in turn limiting a more
consumption-led economic growth model. Given the global
debt burden, it is most likely that global taxation will continue
to increase going forward.
If global scal expansion is limited, it could have been possible
to expect monetary policy to be more accommodative.
However, the combination of tight labor markets and sticky
prices is likely to keep nominal interest rates relatively high for
the foreseeable future. This is a departure from the unusual
low-interest-rate era that followed the Global Financial Crisis
and that closed with the US Federal Reserve’s rst interest-
rate hike in this cycle in March 2022. Real, ination-adjusted,
policy rates are still low in most countries, given the relatively
high rates of ination, notably in the US and in Europe (Chart
7). Financial conditions have more room to ease in China,
for instance, particularly given China’s 0% ination rate as of
September 2023
16
. However, all the trends discussed here
point to structurally higher ination than the three-decades-
long low ination environment the world experienced broadly
since the 1990s.
12 “Global Debt Monitor”, IIF, September 2023.
13 “Fiscal Monitor”, IMF, October 2023.
14 “Debt Dynamics”, IMF Annual Report 2022.
15 Quinn and Wright, “The Myth of China’s Fiscal Space”, Rhodium Group, August 2023.
16 “Global Financial Stability Report: Financial and Climate Policies for a High-Interest-Rate Era”, IMF, October 2023.
Policy Rate, US Federal Reserve US Inflation Rate Implied Real Interest Rate
15%
20%
-5%
0%
5%
10%
-10%
25%
1970 19951975 1980 1985 1990 2000 2005 2010 2015 2020
2023
Chart 7: US nominal policy- and real interest rates, and ination (CPI)
Source: MacroBond
8 Global Outlook for Air Transport — A local sweet spot 1. Long-term trends are becoming less supportive
Going green
As uncertainty increases and the economic and political
landscape becomes more fragmented, risk appetite will fall,
and money will ow to relatively safer havens. Unless the world
loses faith in the US economy, and abstracting from uctuations
in the business cycle, the US dollar – aectionately called “the
greenback” – is most likely to continue to be the world’s preferred
safe-haven asset. This will tend to increase the value of the US
dollar versus most other currencies. Trade weighted and ination
adjusted, the US dollar is now around 25% stronger versus its
trading partners’ currencies than in 2010 (Chart 8). This too tends
to have a dampening eect on global growth in most regions.
100
120
120
130
40
60
70
80
90
50
30
140
2010 2011 2012 2013 20192014 2015 2016 2017 2018 2020 2021 2022
Brazil
Euro Area
Japan
Turkey
United Kingdom
United States
Switzerland
Chart 8: Real Eective Exchange Rates (2010=100)
Sources: BIS, Macrobond
9 Global Outlook for Air Transport — A local sweet spot 1. Long-term trends are becoming less supportive
Set me free
17
In sum, the longer-term and structural trends that we see in
the global economy point to reduced cross-border activity, a
lower GDP growth potential, and greater economic and political
fragmentation. The associated more inward-looking economic
policies will likely lead to structurally higher ination and nominal
interest rates. Tax burdens are destined to grow because of the
lack of economic growth and high debt obligations. Conict and
climate issues will heighten the appeal of safe-haven assets
such as the US dollar. Such an outlook begs the question of
whether the world will be able to deliver a successful energy
transition and replace most of the fossil fuels used today with
renewable fuels. Indeed, the IEA’s estimate of USD 4 trillion per
year of annual investments in renewable energy that such an
outcome would necessitate looks vastly more challenging in a
low-growth economy. Nevertheless, it is possible. Technological
change could surprise on the upside and progress could come
more rapidly than currently expected. Policies could become
more supportive of the energy transition, and capital could
reallocate more swiftly than anticipated. All stakeholders need
to unite in the eort, including the oil and gas sector. Today
only the smallest of fractions of the oil and gas industry’s
recent unprecedented cash ow is allocated to clean energy
technologies, while dividends and share buybacks have reached
record highs (Chart 9).
Yet it is precisely the energy transition that could reverse the
unhelpful long-term trends and propel the global economy
into a new era of improved economic outcomes for all. A world
set free of its energy constraint would be something utterly
unprecedented. Abundant, sustainable, and cheap energy
accessible to all would have a profound and transformational
impact on politics and economics in the world. To be sure, new
challenges would arise. But the energy transition is the one
overarching objective that all our world leaders, regulators,
and all of us must pursue with single-minded focus, without
compromise, and with unwavering persistence.
17 The Supremes, “You Keep Me Hangin’ On”, 1967.
Oil and gas capital expenditure Low-carbon capital expenditure Dividends plus buybacks minus issuances Net debt repaid
80%
60%
40%
20%
0%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Chart 9: Distribution of cash spending by the oil and gas industry
Source: World Energy Investment, 2023, IEA 2023
10 Global Outlook for Air Transport — A local sweet spot
2. Air transportation is back,
but the pace of growth will slow
Air passenger trac
Recent development and outlook
Global demand for air travel remained strong in 2023, with the
industry steadily approaching 2019 levels of passenger trac.
Following a signicant 64.9% YoY upturn in 2022, industry-
wide passenger trac, measured in revenue passenger-
kilometers (RPKs), surged by 40.1% in the rst nine months
of 2023, compared to the same period in the previous year.
This strong performance was reected across all regions,
with North American carriers leading the recovery, beneting
from an early reopening and robust domestic demand. The
reopening of Chinese markets in January also played a pivotal
role in accelerating global passenger trac recovery in 2023,
particularly reviving travel in the Asia Pacic region (Chart 10).
The passenger load factor (PLF), a measure of airline seating
capacity utilization, has steadily improved since its low point
in 2020, converging to pre-pandemic levels by the end of
2022. The global PLF reached 82.3% during the rst nine
months of 2023, which is broadly in line with the load factor
achieved during the same period in 2019. This underscores
the delicate balance between demand and capacity that
airlines maintain as air travel recovers globally. During this
period, airlines in Africa, the Middle East, and Latin America
surpassed their respective pre-pandemic PLFs, indicating
enhanced operational eciency for the carriers in these
regions (Chart11).
Chart 10: RPKs per airline region of registration, year-to-date % annual change (January – September)
Sources: IATA Sustainability and Economics, IATA Monthly Statistics
Year-to-date growth
Year-to-date growth vs 2019
104.9 %
-15.8%
44.4%
-8.5%
22.9%
37.3%
18.8%
16.9%
40.1%
-5.7%
-3.2%
-0.3%
1.4%
-7.1%
Asia Pacific Africa Europe Middle East Latin America North America Industry
2019 2022 2023
72.0%
85.5%
82.7%
85.1%
82.9%
70.9%
80.4%
81.5%
83.1%
77.8%
73.2%
84.3%
82.9%
84.7%
82.3%
82.0%
69.5%
79.9%
76.7%
74.2%
80.3%
Asia Pacific Africa Europe
Middle East
Latin America North America Industry
Chart 11: Passenger Load Factor by airline region of registration, year-to-date % share of available seat-kilometers (ASKs) (January – September)
Sources: IATA Sustainability and Economics, IATA Monthly Statistics
11 Global Outlook for Air Transport — A local sweet spot 2. Air transportation is back, but the pace of growth will slow
Pent-up passenger demand continued to boost domestic air
travel in 2023, sustaining growth even after surpassing pre-
pandemic levels in April. The recovery in domestic trac was
signicantly helped by China’s reopening, marking the end of
its zero-Covid policy which had been in place for the previous
three years. As China’s domestic market contributes over
25% to global domestic RPKs, the reopening had a substantial
impact on restoring global domestic RPKs, which stood 5.0%
above 2019 levels in September 2023 (Chart 12).
Despite the slower reopening of international markets,
international RPKs also experienced rapid expansion in2023,
growing to a level that in September 2023 sits only 7% below
the equivalent gure for 2019. As a result, total passenger
trac, including both domestic and international across
the industry, was just 2.7% below the levels observed in
September 2019 (Chart 12). A complete recovery appears
imminent, contingent upon the restoration of international
connectivity to and from the Asia Pacic region. Other
factors, including the wars in Ukraine and the Middle East
and their associated potential to restrict airspace and impact
on international operations, will continue to inuence the
evolution of international trac.
Air passenger trac across the regions has nearly returned to
pre-pandemic levels. Globally, the number of air passengers
is projected to recover fully to 2019 levels by the end of 2024
(Chart 13).
All regions are expected to reach their pre-pandemic
passenger levels by the end of 2023, except for Asia Pacic,
where full recovery is anticipated in early 2024, as the gradual
ramp-up of airline operations and the return of tourism are
poised to drive further growth in this region.
Chart 13: Regional passenger totals, % share of 2019 levels
87%
55%
82%
85%
87%
95%
74%
108%
94%
102%
104%
100%
108%
99%
109%
110%
108%
112%
106%
113%
109%
115%
124%
115%
122%
112%
119%
119%
Africa
Asia-Pacific
Europe
Middle East
North America
Latin America
& Caribbean
World
2022 2023 2024 2025
Domestic International Total
-20%
0%
-80%
-60%
-40%
-100%
20%
2020
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
2021 2022 2023
Chart 12: Industry RPKs, % YoY change compared to 2019 levels
Sources: IATA Sustainability and Economics, IATA Monthly Statistics
Sources: IATA Sustainability and Economics, Tourism Economics
(September 2023 release)
Table 1: Air passenger forecast summary
Sources: IATA Sustainability and Economics, Tourism Economics
(September 2023 release)
Region
Recovery
year
CAGR
(2019 - 2040)
Additional passengers
by 2040, millions
Africa 2023 3.6% 169.7
Asia Pacic 2024 4.5% 2,536.8
Europe 2023 2.2% 701.4
Middle East 2023 3.6% 264.1
North America 2023 2.2% 558.5
Latin America
& Caribbean
2023 2.8% 304.0
World 2024 3.4% 3,923.0
12 Global Outlook for Air Transport — A local sweet spot 2. Air transportation is back, but the pace of growth will slow
8
6
4
2
0
10
9
7
5
3
1
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
UP: Air passenger demand benefits from more favourable macroeconomic conditions
DOWN: Weaker macroeconomic conditions inflict lasting damage
Baseline
Over a longer horizon, the Asia Pacic region is likely to see
the most rapid growth in passenger trac among all regions.
An annual increase of 4.5% in the number of passengers is
forecast for the region between 2019 and 2040, bringing
the regional total to over 4 billion in 2040, at which point the
region would make up more than half of global passenger
demand (Table 1). India, in particular, is expected to contribute
signicantly to this growth, with a forecast annual passenger
growth rate of 6% over the same horizon, resulting in an
additional half a billion air passengers per year over the next
20 years.
At a global level, air passenger growth will continue to
increase, but at a slower pace compared to that experienced
during the past 3 years. Between 2023 and 2040, the number
of air passengers is forecast to increase by 4.2% annually.
This would be a radical slowdown from the exceptional
36% annual growth rate seen over the past three years, as
markets emerged from the depths of the Covid crisis. Having
restored trac to pre-pandemic levels, this deceleration will
nevertheless allow the number of industry-wide air passenger
journeys to more than double from the 2019 level, to reach 7.8
billion by 2040.
There is of course a considerable range of uncertainty around
any such long-term forecast. On the upside, air passenger
demand could benet from more favorable macro-economic
conditions such as normalizing supply chains and lower
ination rates, allowing for an earlier unwinding of the current
monetary policy tightening. Conversely, on the downside, risks
prevail regarding the strength of the business cycle and the
impact and extent of the wars in Ukraine and the Middle East.
These could cap the available airspace and curtail growth in
international trac, especially on routes between Europe and
Asia Pacic (Chart 14).
Chart 14: Global air passenger journeys, billion
Sources: IATA Sustainability and Economics, Tourism Economics (September 2023 release)
13 Global Outlook for Air Transport — A local sweet spot 2. Air transportation is back, but the pace of growth will slow
Connectivity and contribution to the wider economy
Air transport is a necessary and important contributor to
global economic development. The returning connectivity
between countries and cities – enabling the ow of goods,
people, capital, technology, and ideas, supports the global
business cycle and helps mitigate the many mounting clouds
on the horizon (Table 2).
The Covid pandemic brought an abrupt and substantial
decline in connectivity in 2020, with the number of unique
city pairs falling by more than 28% and eliminating almost
6,000 routes. The recovery since that time has been more
subdued, as travel restrictions were removed gradually and
unequally around the world. Despite the observed recovery in
the number of city pair routes, it is important to note that the
frequency of service on those routes is slower to be restored
to pre-pandemic levels, and the return of capacity will lag the
recovery in the absolute number of city-pair connections
Chart 15: IATA Global Air Connectivity Index, Jan 2020 – Sep 2023, 2019 = 100
Source: IATA Connectivity Index, using data from OAG
Domestic
International
89.5
97.5
80
100
20
40
60
0
120
2020
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
2021 2022 2023
Worldwide airline industry 2019 2020 2021 2022 2023e 2024f
Unique city pairs 21,736 15,621 16,846 19,665 21,985 22,976
compared to 2013 30% -10% -5% 6% 12% 10%
Real price, USD/RTK 2018USD 77. 6 73.1 77. 6 77.2 70.2 66.8
compared to 2013 -31% -35% -31% -31% -38% -41%
Value of trade carried, USD billion 6,482 5,961 7,570 8,486 8,052 8,025
% change over year -2.7% -8.0% 27.0% 12.1% -5.1% -0.3%
Table 2: The wider economic contribution of air transport
Source: IATA Sustainability and Economics
IATA’s connectivity index measures scheduled passenger
capacity weighted by the economic scale of destinations
served (Chart 15). International connectivity has recovered
to 89.5% of pre-pandemic levels and domestic connectivity
to 97.5%, an increase of 12 percentage points compared to
2022. Connectivity has been impacted by the restrictions
related to ying to and from Russia. At the global level,
the eect is limited but regionally and for specic trading
partners and key markets, trac has been disrupted in a more
substantial manner. Overall and following the reopening of the
Chinese market, the international recovery in air connectivity
is expected to improve further in 2024.
14 Global Outlook for Air Transport — A local sweet spot 2. Air transportation is back, but the pace of growth will slow
Following a robust performance during the pandemic
and especially in 2021, global air cargo demand faced
considerable challenges in 2022, including a slowdown in
global trade and economic growth, the war in Ukraine, high
ination in key markets, and elevated global oil prices, all
of which exerted signicant downward pressure on cargo
markets.
Industry-wide cargo tonne-kilometers (CTKs) started to
contract in early 2022, and fell every month until the middle
of 2023. Although trade and exports have remained sluggish,
CTKs have managed to rebound since then, improving from
the double-digit declines earlier this year to almost 2% YoY
growth as of September (Chart 16).
Cargo capacity, measured in available cargo tonne kilometers
(ACTKs), nevertheless expanded consistently since the
beginning of 2023, driven mostly by the resurgence of
Chart 17: Recovery trends in international air cargo trac and capacity, total international cargo by business type, 2019-2023 Q1-Q3
Chart 16: Seasonally adjusted global ACTK and global CTK, billions
Source: IATA Connectivity Index, using data from OAG
Sources: IATA Sustainability and Economics, IATA Monthly Statistics
PreightersDedicated Freighters Passenger Belly
250
300
350
400
200
150
100
50
0
500
Milions
450
52%
67%
64%
64%
41%
60%
61%
54%
51%
49%
5%
41%
13%
26%
10%
29%
59%
7%
30%
16%
20%
13%
20%
48%
220.7
195.7
236.7
217
425.3
329.2
370.5
387.1
311.9
Cargo Tonne Kilometers (CTKs)
2019 2020 2021 2022 2023 Q1-Q3
Available Cargo Tonne Kilometers (ACTKs)
2019 2020 2021 2022
2023 Q1-Q3
154
62%
38%
Global ACTK
Global CTK
45
35
25
10
0
55
50
40
30
20
15
5
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 20232020
passenger aircraft belly-hold capacity on international routes.
Consequently, global air cargo capacity surpassed the pre-
Covid level in April 2023. As of September, industry wide
ACTKs exceeded its pre-pandemic level by 4% (Chart17).
Passenger aircraft belly-hold capacity as a share of total
ACTKs has risen to 49% year-to-date (YTD) in 2023, from a
low of 20% in 2020 (Chart 17). Over the past two years, the
capacity for international cargo transported in the belly space
of passenger aircraft has risen markedly, nearly doubling
its proportion relative to the diminishing role of dedicated
cargo aircraft. In the meantime, the temporary conversion of
passenger aircraft to cargo carriers (termed “preighters”) has
been phased out. The incoming capacity in the belly hold of
passenger aircraft has caused a decrease in the cargo load
factors (CLF) on international routes. The downward trajectory
of CLFs will likely stabilize once passenger and cargo trac
levels realign with pre-pandemic norms.
Air cargo trac
15 Global Outlook for Air Transport — A local sweet spot 2. Air transportation is back, but the pace of growth will slow
Among the top ve route areas, which represented 75% of
international CTKs in 2019, three remained resilient through
September 2023. The Asia Pacic-North America, Europe-
North America, and Asia Pacic-Middle East route areas
consistently maintained CTKs above their pre-pandemic
levels in the rst half of 2023. This sustained performance
underscores their resilience in the face of broader market
challenges.
In contrast, reecting the slowdown in regional economies as
well as geopolitical conicts, the Asia Pacic-Europe and the
within Asia Pacic markets remained below their 2019 CTK
levels throughout the January to September 2023 period
(Chart 18).
Chart 19: Year-to-date (Q1-Q3) 2023 CTKs compared to the same period in 2022 and 2019
Chart 18: International CTKs by route area – top 5 route areas (indexed, 2019 = 100)
Sources: IATA Sustainability and Economics, IATA Monthly Statistics
Sources: IATA Sustainability and Economics, IATA Monthly Statistics
Notes: Rankings are based on the route area shares of 2019 international CTKs (% shares are provided in parentheses)
-10%
-15%
10%
0%
5%
-5%
Asia Pacific Africa Europe Middle East Latin America
and Caribbean
North America Industry
-7.2%
-13.7%
-3.2%
9.2%
1.1%
-2.4%
-3.3%
-1.9%
-8.0%
6.2%
-3.1%
-8.2%
-5.3%
-4.7%
Q1-Q3 2023 vs. Q1-Q3 2022 Q1-Q3 2023 vs. Q1-Q3 2019
Asia Pacific-North America (Rank 1: 26.5%)
Asia Pacific-Europe (Rank 2: 19.0%)
Europe-North America (Rank 3: 14.9%)
Within Asia Pacific (Rank 4: 7.4%)
Asia Pacific-Middle East (Rank 5: 6.9%)
60
40
180
140
160
120
100
80
2020 2021 2022 2023
Industry CTKs fell short of the pre-Covid level by 4.7%
(Chart19). Latin America is the only region to achieve growth
in YTD CTKs compared to 2022, even though the region’s
cargo demand stands 2.4% below 2019 levels. Compared to
2019, the regions of North America and Africa were the only
ones to see higher CTKs on a YTD basis in 2023.
16 Global Outlook for Air Transport — A local sweet spot
3. Airline Financial Performance
Overview
Despite the rapid growth in passenger demand and the
absence of travel restrictions, the aviation industry is still
grappling with the aftermath of the pandemic, during which
it recorded a historic loss of almost USD 140 billion. In the
face of many challenges, including wars, oil price volatility,
elevated interest rates, and sta shortages, which all weigh
on its nancial performance, we nevertheless expect a return
to protability in 2023. This is a remarkable feat, realized in an
equally remarkable short period of time.
Data published since our mid-year nancial forecast show a
stronger than previously anticipated industry-wide nancial
performance. The better-than-expected results have been
seen most notably in North America, Europe and Asia Pacic.
At the industry level, we currently estimate the overall net
post-tax prot to reach USD 23.3 billion in 2023, with a slim
operating prot margin of 4.5% (Chart 20).
Further recovery in international travel in Asia Pacic
underpins our expectations for 2024. At the global level, the
industry is expected to generate a net prot of USD 25.7 billion
next year, with a still modest 2.7% net prot margin. The key
nancial gures can be found in Table 3 below.
0
20
40
-20
-40
-60
-140
-120
-100
-80
-160
60
0
5%
10%
-5%
-10%
-15%
-35%
-30%
-25%
-20%
-40%
15%
US$bn
EBIT margin Net post-tax profit
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
2022 2024f
Chart 20: Global airline protability
Sources: IIATA Sustainability and Economics, The Airline Analyst
Chart 21: Global airline revenue
Sources: IATA Sustainability and Economics, The Airline Analyst
Industry wide, total airline revenue is forecast to recover to
around 107% of the pre-Covid level in 2023 (Chart 21). Air
passenger revenue will climb to around USD 642 billion and be
partly oset by somewhat lower air cargo revenue, following
the exceptional cargo revenues of the past couple of years.
Even so, at around USD 135 billion it will still be some 34%
higher than its pre-Covid level.
2021: 61%
of 2019
2022: 88%
of 2019
2023: 107%
of 2019
Cargo revenue
Passenger + Other revenue
600
700
800
500
100
200
300
400
0
900
1000
US$bn
2015 2019201820172016 2020 2021 2022 2023e 2024f
2024: 115%
of 2019
17 Global Outlook for Air Transport — Highly Resilient, Less Robust 3. Airline nancial performance
• A global GDP growth rate of 3.0% this year and 2.9% in
2024, broadly in line with the long-run average rate of
growth.
• Ination pressures easing gradually throughout 2023 and
2024, following a peak in 2022. Real interest rates, though
now positive, should remain relatively low in a long-term
perspective after many years of negative real interest
rates.
• The USD is expected to hold its strength or strengthen
further versus most other currencies.
• Labor markets are tight and unemployment rates will
climb only slowly from the current low levels.
• An average crude oil price of around USD 85 per barrel in
2023 and USD 85 - 90 per barrel in 2024. The jet fuel crack
spread is expected to narrow but stay above its long-term
historical average.
• The passenger and eet growth assumptions are
consistent with the information laid out in the sections
above, and highly dependent on the continued strong
recovery in the China market.
• The outlook also depends critically on the evolution of
the wars in the Middle East and Eastern Europe, which we
assume will not spread.
The key assumptions underpinning our nancial forecast include:
Worldwide airline industry 2019 2020 2021 2022 2023e 2024f
Spend on air transport, USD billion 876 396 528 763 936 1 008
% change over year 3.6% -54.8% 33.2% 44.6% 22.6% 7.7%
% global GDP 1.0% 0.5% 0.5% 0.7% 0.9% 0.9%
Real return fare, USD/pax (2018USD) 315 216 231 284 288 283
compared to 2013 -36% -56% -53% -42% -42% -43%
Real freight rate, USD/kg 1.79 2.77 3.49 3.73 2.53 2.00
compared to 2013 -19% 25% 57% 68% 14% -10%
RPKs, billion 8,688 2,974 3,623 5,974 8,271 9,082
% change over year 4.1% -65.8% 21.8% 64.9% 38.4% 9.8%
CTKs, billion 254 229 272 250 241 252
% change over year -3.2% -9.9% 18.8% - 8.1% -3.7% 4.5%
World GDP growth (real), % 2.5% -3.5% 6.3% 3.5% 3.0% 2.9%
World trade growth, % 0.3% -5.1% 9.8% 3.0% 0.8% 3.3%
Aircraft departures, million 38.9 16.9 20.1 27. 8 36.8 40.1
% change over year 2.1% -56.5% 18.5% 38.4% 32.6% 9.0%
ASKs, % change over year 3.3% -56.6% 18.7% 40.2% 33.0% 8.9%
Passenger load factor, % ASK 82.6% 65.2% 66.9% 78.7% 82.0% 82.6%
Cargo load factor, % AFTK 46.8% 53.8% 56 .1% 49.9% 43.2% 43.9%
Weight load factor, % ATK 70.4% 70.0% 59.5% 61.7% 66.9% 67.7%
Breakeven load factor, % ATK 66.4% 66.4% 76.7% 67.0% 65.8% 64.6%
Table 3: Key air nance gures
Source: IATA Sustainability and Economics
18 Global Outlook for Air Transport — Highly Resilient, Less Robust 3. Airline nancial performance
Revenue development
In dollar terms, passenger revenues are projected to reach
USD 642 billion in 2023, a remarkable increase of 47% from
2022, and exceeding 2019 levels by 7%. Reecting capacity
constraints, including delays in aircraft deliveries worldwide,
the passenger load factor will likely increase to 82% this
year, bringing about elevated yields across most markets.
Passenger revenue growth is expected to slow markedly
in 2024, to 12%, but from the much higher 2023 base. We
anticipate still strong passenger demand, half of which will
come from Asia Pacic. With capacity continuing to return
in 2024, especially in Asia Pacic, growth in yields is set to
decelerate.
In 2023, cargo revenue is expected to decline by 35% YoY,
driven by both lower demand and falling freight rates. North
America and Europe are the regions particularly aected by
lower demand. Cargo capacity is returning as more passenger
aircraft re-enter service, while freight rates are impacted by
competition from lower maritime cargo rates. We expect
cargo revenue to continue to decline, and the split between
passenger and cargo revenue to revert to the pre-pandemic
shares of 88% and 12% respectively. The forecast increases
in cargo demand (CTK) of 4.5% will be fully oset by a further
erosion of freight rates. Freight rates are nevertheless most
likely to remain above the pre-pandemic levels.
Capital providers
Historically, the air transport industry has struggled to deliver
the returns which equity investors expect to receive for risking
their capital. Put another way, the return on invested capital
(ROIC) has typically been lower than the weighted average
cost of capital (WACC) in the air transport industry. While this
holds true for the industry as a whole, it is not necessarily the
case in each region. In the four years prior to the pandemic, we
estimate that equity investors in Europe and North America did
receive returns above the cost of capital, helping the industry’s
apparent move towards a more sustainable nancial future.
The pandemic changed all of that, plunging the industry into
a record loss in 2020 and causing a signicant deterioration
across nancial metrics including ROIC. Since that low
point, we have seen a recovery in the industry’s nancial
performance as well as in trac volumes. With ROIC turning
positive again in 2022 at just shy of the 2% mark, the metric is
expected to continue to increase in 2023 and 2024 reaching
4.7% and 4.9% respectively, again driven by the nancial
outcomes in North America and Europe in particular. At the
same time, however, the cost of capital has increased in
2023 and is expected to remain elevated in 2024, as interest
rates around the world have risen in response to the sharp
inationary impulse. This has maintained a sizeable gap
between ROIC and WACC. (Chart 22, Table 4).
Worldwide airline industry 2019 2020 2021 2022 2023e 2024f
ROIC, % invested capital (IC) 5.8% -19. 3% -8.0% 2.0% 4.7% 4.9%
EBIT margin, % revenue (rev) 5.2% -28.8% -8.6% 1.6% 4.5% 5 .1%
Net post-tax prots, USD billion 26.4 -137.7 -41.0 -3.8 23.3 25.7
% revenue 3.1% -35.8% -8.0% -0.5% 2.6% 2.7%
USD per passenger 5.80 -78.38 -17.91 -1.09 5.44 5.45
Table 4: Summary of key nancial metrics
Source: IATA Sustainability and Economics
Chart 22: Return on capital invested in airlines globally, 2008-2024f, % of invested capital
Source: IATA Sustainability and Economics
Return on capital (ROIC)Cost of capital (WACC)
-10%
-15%
-20%
-25%
15%
10%
0%
5%
-5%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024f
19 Global Outlook for Air Transport — Highly Resilient, Less Robust 3. Airline nancial performance
Aircraft
Aircraft deliveries will increase in 2023 compared to 2022,
albeit remain below 2019 levels. The number of aircraft
scheduled for delivery in 2023 has been revised lower,
reecting the ongoing supply chain issues that have created
production delays.
However, seeking to acquire more fuel-ecient and quieter
equipment, airlines around the globe have continued to place
large orders for new commercial jets. The number of new
aircraft deliveries will reach 1,777 in 2024 and 2,075 in 2025
according to current schedules – a record in the history of
commercial aviation.
The increase in demand for new airplanes is, unsurprisingly,
driven by the three largest regional markets: Asia Pacic,
Europe, and North America (Chart 23). The industry’s orders
are now more oriented towards narrowbody aircraft, a market
trend that has persisted through and since the pandemic. The
number of orders for regional aircraft and widebody jets has
stagnated, while those for new generation narrowbody jets
has increased over the past years (Chart 24).
Chart 23: New aircraft deliveries by airline region of registration, 2018-2025 (scheduled and delivered)
Chart 24: New aircraft deliveries by class, % share of total
Sources: IATA Sustainability and Economics, Cirium Fleet Analyzer
Sources: IATA Sustainability and Economics, Cirium Fleet Analyzer
Latin America North America Middle East Asia-Pacific Africa Europe
Industry total
1813
2018 2019 2020 2021 2022 202520242023
349
32
794
435
91
112
48
551
315
102
85
306
1407
27
270
200
31
47
231
806
22
335
276
84
49
274
1040
22
350
314
111
55
386
1238
30
357
354
81
94
456
1372
31
518
470
117
99
542
1777
40
647
544
160
95
589
2075
Widebody Jets Regional Turboprops Regional Jets Narrowbody Jets
67.0%
7.8%
5.2%
20.0%
2018
56.2%
9.4%
6.4%
28.0%
2019
63.2%
12.4%
2.5%
22.0%
2020
74.0%
9.3%
3.8%
12.8%
2021
75.8%
7.8%
2.8%
13.5%
2022
74.6%
7.3%
3.8%
14.3%
2024
74.1%
6.9%
4.1%
15.0%
2023
20 Global Outlook for Air Transport — Highly Resilient, Less Robust 3. Airline nancial performance
Labor
Global unemployment rates are generally at or around historically
low levels. This is contributing to labor and skill shortages in many
countries and across a broad spectrum of industries, including
aviation. The time taken to recruit, train, undertake the necessary
security checks and other requirements before sta are “job-
ready” continues to present challenges for the industry in 2023.
Sta shortages resulted in signicant disruption during the
peak Northern Hemisphere summer period last year. While
the situation started to stabilize this year, with notably fewer
disruptions, tight labor markets and persistent ination
translate into upward pressure on wages. For air transport, we
expect that the labor and skill shortages observed in 2023 will
gradually dissipate next year. Nonetheless, wages will rise with
the higher cost of living, and the industry will have to keep up
with the employment needs dictated by the strength of the
demand for air transportation (Table 5).
Fuel
The outbreak of war in Europe in February 2022 caused a sharp
increase in global oil prices. The price of jet fuel rose further
still, exceeding USD 175 per barrel in the summer of 2022,
causing the spread between jet fuel and crude oil prices (jet
crack spread) to climb above USD 60 per barrel.
In 2023, crude oil prices again increased in the second half of
the year but have so far remained below the levels of 2022. The
main driver of this trend is the war in the MiddleEast, which
poses a risk to the stability of oil production and exports, as
well as OPEC’s production curbs. We estimate the average
crude oil price in 2023 at USD 85 per barrel and see the crack
spread remaining high at USD 30.6 per barrel, reecting the
limited rening capacity allocated to jet fuel. According to our
estimates, the aviation industry will consume between 450k
and 500k tonnes of sustainable aviation fuel (SAF) at USD 2500
per tonne (or 2.8x jet fuel), which will add USD 756 million to the
industry fuel bill in 2023.
In 2024, we forecast that crude oil prices will remain high
between USD 85-90 per barrel, depending on the evolution of
the geopolitical situation in the Middle East, and the production
decisions of OPEC. If it decides to increase its output targets
to meet the growing demand, the price could drop. Clearly, a
sharper decline in global GDP growth could also push the price
lower. In our central scenario, the crack spread should narrow
to 30%, down from 36% in 2023, equivalent to USD 26 per
barrel (Table 6).
The aviation industry will increase its use of SAF and carbon
credits to reduce its carbon footprint. We estimate that
SAF production could rise to 0.53% of airlines’ total fuel
consumption in 2024, adding USD 2.4 billion to next year’s fuel
bill. In addition, the carbon osetting and reduction scheme for
international aviation (CORSIA) is a global market-based carbon
osetting mechanism designed to stabilize international
aviation emissions. The CORSIA-related costs are estimated at
USD 1 billion in 2024. These costs will add more pressure to the
already fragile protability of the industry.
Worldwide airline industry 2019 2020 2021 2022 2023e 2024f
Fuel spend, USD billion 190 80 105 215 271 281
% change over year 6.8% -58.0% 31.8% 104.2% 26.1% 3.8%
% opex 23.9% 16.1% 18.9% 29.7% 31.7% 30.8%
Fuel use, billion liters 359 196 236 292 357 377
% change over year 1.0% -45.3% 19.9% 23.8% 22.5% 5.4%
Fuel eciency, fuel/100 ATK 22.1 21.7 22.4 22.6 22.3 22.1
% change over year -1.8 % -1. 8% 3.2% 1.2% -1.2% -1.2%
Fuel price, USD/barrel 79.7 46.6 77.8 135.6 115.5 113. 8
% change over year -7.4% -41.5% 67.0% 74. 3% -14. 8% -1. 5%
% spread over oil price 22.6% 11. 6% 10.1% 35.0% 36.0% 30.0%
Worldwide airline industry 2019 2020 2021 2022 2023e 2024f
Labour costs, USD billion 189 160 162 175 194 206
% change over year 3.5% -15.2% 0.8% 8.2% 11. 3% 6 .1%
Employment, million 2.93 2.56 2.61 2.75 2.94 3.05
% change over year 0.3% -12.6% 2.0% 5.0% 7. 0% 4.0%
Productivity, ATK/employee 526,003 335,264 382,10 9 445,100 516,068 529,144
% change over year 2.5% -36.3% 14.0% 16.5% 15.9% 2.5%
Unit labour costs, USD/ATK 0.123 0.187 0.162 0.143 0.128 0.128
% change over year 0.6% 52.2% -13.3% -11.6% -10.3% -0.5%
Table 6: Fuel
Table 5: Key industry labor metrics
Source: IATA Sustainability and Economics
21 Global Outlook for Air Transport — Highly Resilient, Less Robust 3. Airline nancial performance
Regions
The nancial performance of all regions is expected to
improve in 2023 compared to 2022, and to exceed our mid-
year expectations. However, the regions have recovered at
dierent speeds, according to their response to the Covid
pandemic and its aftermath (Table 7). Based on the latest data
available, we estimate that three regions will generate a net
prot in 2023, led by North America.
North America remains the standout region in terms of
nancial performance in air transportation. As the rst market
to return to protability (in 2022), the North American carriers
are expected to build on this performance in 2023, and
deliver a net prot of USD 14.3 billion, supported by a high
passenger load factor and higher yields. Consumer spending
has remained solid, despite cost-of-living pressures, and
the demand for air travel is robust. We expect air passenger
demand to exceed its pre-Covid level this year. In 2024 higher
passenger demand (RPK growth of 6%) and elevated load
factors remaining at 85% are expected to further strengthen
revenue development and operating protability.
Europe is likely to end 2023 with a stronger than expected
performance, notwithstanding the various capacity issues and
supply side constraints the region faces. European carriers
will likely deliver a net prot of around USD 7.7 billion in 2023.
With strong demand for air travel set to continue in 2024,
net prots should increase to around USD 7.9 billion, and a
net prot margin of 3% in 2024. The key risks to the region’s
performance relate to the tight labor market, the war in Ukraine
and in the Middle East, as well as ongoing concerns about the
economic outlook in some key countries inside and outside of
this region.
Asia Pacic shows remarkable revenue growth in 2023 and is
expected to be responsible for half of the world’s RPK growth
this year. This is very much thanks to the gains seen in the
domestic markets of China, India, and Australia, all recovering
at a faster rate than the rest of the world currently. However,
international travel in the region remains subdued, especially
in China, where it is still 40% below the pre-Covid levels. This
indicates that there is still a lot of pent-up demand for cross-
border travel in the region, which will likely boost the future
growth prospects regarding air transportation. Despite robust
revenue growth, the region is expected to see a loss in 2023
of USD 0.1 billion, and return to protability in the second half
of 2024.
Latin America has seen a steady improvement in nancial
performance since 2020 but is expected to generate a loss
of around USD 0.6 billion in 2023. The performance of airlines
across the region has been very mixed; some are performing
strongly, while others nd themselves in considerable nancial
diculties including being in or coming out of chapter 11
proceedings. In part, this a consequence of the economic and
social turmoil observed in the region. The trend of nancial
improvement is nevertheless clear, with the net prot margin
going from -11% in 2021 to an estimated -2% in 2023 and a
forecast -1% in 2024.
The Middle East is expected to deliver a strong nancial
performance in 2023, likely recording a net prot of around
USD 2.6 billion, coupled with a 6% net prot margin.
The Middle East carriers have been swift to rebuild their
international networks and continue to operate important
global hubs. The region’s nancial recovery is supported by
still signicant RPK growth that is likely to reach almost 35% in
2023. A net prot of around USD 3.1 billion at a 5% net prot
margin is expected in 2024.
Carriers based in Africa are expected to generate a loss
of around USD 0.5 billion in 2023. Africa remains a dicult
market in which to operate an airline, with economic,
infrastructure, and connectivity challenges all impacting the
industry’s performance. Despite these challenges, there is
robust demand for air travel. Underpinned by this demand, the
industry will continue to move towards protability following
the Covid disruption, though we still foresee a modest loss in
2024.
•
22 Global Outlook for Air Transport — Highly Resilient, Less Robust 3. Airline nancial performance
Table 7: Regional nancial performance
Worldwide airline industry 2019 2020 2021 2022 2023e 2024f
Africa
Net post-tax prot, USD billion -0.3 -1.8 -1.1 -0.8 -0.5 -0.4
Per passenger, USD -2.7 -58.0 -24.7 -10. 2 -5.1 -4.5
% revenues -1.8% -29.9% -14.6% -7.1% -3.4% -2.7%
RPK growth, % 4.7% -68.2% 17.0% 84.8% 40.1% 7.3%
ASK growth, % 4.5% -62.1% 18.5% 51.5% 38.4% 9.4%
Load factor, % ATK 59.6% 51.4% 53.3% 62.2% 63.7% 63.0%
Breakeven load factor, % ATK 55.6% 6 0.1% 57.0% 64.2% 63.9% 62.9%
A s i a / P a c i c
Net post-tax prot, USD billion 4.9 -44.8 -13.7 -13 . 6 -0.1 1.1
Per passenger, USD 2.9 -59.3 -17.4 -13.9 - 0.1 0.6
% revenues 1.9% -39.6% -10.4% -8.7% -0.1% 0.5%
RPK growth, % 4.7% -62.0% -12.8 % 31.9% 98.1% 13.5%
ASK growth, % 4.4% -53.8% -6.1% 15.6% 77. 9% 10.6%
Load factor, % ATK 72.3% 63.8% 63.3% 65.6% 66.9% 69.0%
Breakeven load factor, % ATK 69.6% 85.5% 70.9% 71.4% 67.1% 67.0%
Middle East
Net post-tax prot, USD billion
-1.5 -9.6 -4.9 1.4 2.6 3.1
Per passenger, USD
-6.8 -142.0 -59.8 7.1 11.2 13.3
% revenues
-2.7% -35.1% -15.0 % 2.6% 4.3% 4.8%
RPK growth, %
2.3% -72.1% 8.5% 144.6% 34.6% 6.3%
ASK growth, %
-3.3% -61.7% 21.2% 67.2% 28.0% 10.7%
Load factor, % ATK
63.5% 54.7% 54.9% 62.9% 62.9% 63.4%
Breakeven load factor, % ATK
67.7% 68.3% 61.5% 59.7% 59.1% 59.6%
Latin America
Net post-tax prot, USD billion -0.7 -11. 9 -7.0 -3.9 -0.6 -0.4
Per passenger, USD -2.2 -131.4 -52.6 -17.5 -2.5 -1.1
% revenues -1.8% -73.7% -31.9% -10 .7% -1.5% -0.8%
RPK growth, % 4.2% -62.5% 40.5% 62.9% 16.3% 7.4%
ASK growth, % 2.9% -58.9% 37. 3% 54.4% 14.4% 7.8%
Load factor, % ATK 69.2% 64.4% 66.6% 68.8% 68.3% 69.1%
Breakeven load factor, % ATK 65.3% 82.6% 72.6% 71.7% 68.4% 68.7%
North America
Net post-tax prot, USD billion 17.4 -35.1 -2.3 9.1 14.3 14.4
Per passenger, USD 17.0 -84.7 -3.2 8.9 12.5 13.5
% revenues 6.6% -25.2% -1.1% 3.0% 4.2% 4.0%
RPK growth, % 4.0% - 65 .1% 74.6% 45.6% 16.0% 6.3%
ASK growth, % 4.4% -51.0% 41.1% 28.7% 14.6% 6.0%
Load factor, % ATK 66.0% 52.1% 59.2% 64.0% 64.8% 65.2%
Breakeven load factor, % ATK 57. 8% 66.3% 62.7% 60.1% 60.2% 60.8%
Europe
Net post-tax prot, USD billion 6.5 -34.5 -12.1 4.1 7.7 7. 9
Per passenger, USD 5.42 -85.96 -22.8 4.18 6.86 6.39
% revenues 3.1% -41.7% -11.0% 2.3% 3.5% 3.3%
RPK growth, % 4.2% -69.5%
27. 5%
101.7% 22.3% 10.5%
ASK growth, % 3.5% -62.3% 29.8% 69.9% 18.4% 8.8%
Load factor, % ATK 74.9% 65.2% 66.2% 73.6% 74.6% 76 .1%
Breakeven load factor, % ATK 71.3% 82.8% 72.1% 70.6% 69.8% 71.5%
Source: IATA Sustainability and Economics
23 Global Outlook for Air Transport — Highly Resilient, Less Robust 3. Airline nancial performance
Risks
Although the airline industry should see further growth in
passenger demand in 2024, it will also have to deal with the
uncertainties arising from economic and geopolitical factors.
With net prots of just USD 23 billion and a net margin of 2.6%,
resulting from revenues of USD 896 billion and USD 855 billion
in expenses in 2023, the industry’s protability is fragile and
could be aected (positively or negatively) by many factors:
• Despite easing ination, low unemployment rates, and
consumers’ desire to travel in 2023, the risk of a sharper
economic slowdown has not disappeared. Interest rates
remain high in response to persistent ination and tight
labor markets. Developments in China are a particular risk
to the global business cycle. Should unemployment rise
signicantly, the industry’s outlook could shift negatively.
• As much as 20% of the European airspace is closed due
to the war in Ukraine. The main eect of this regrettable
situation has been seen on the routes own, rather than
on global trac numbers. Much of the aected trac
has been rerouted via Turkey and the Middle East, for
example. A currently unanticipated peace could deliver
the potential for cost improvements with lower oil prices
and eciencies from the removal or easing of airspace
restrictions. The war in the Middle East has pushed oil
prices higher again, and OPEC countries’ output decisions
will also inuence future prices. Clearly, any escalation
in these conicts could produce a radically dierent
scenario for the world and for global aviation.
• Supply chain issues continue to impact global trade and
business. Airlines have been directly impacted by delays
in the delivery of aircraft parts and of aircraft, limiting
capacity expansion and eet renewal.
• On the regulatory front, the industry could face rising
costs of compliance, and additional costs pertaining to
passenger rights regimes, regional environment initiatives,
and accessibility requirements.
The airline industry is expected to experience slower growth
in 2024 as global trac should nally reach the pre-pandemic
level, ending a high-growth recovery phase. Industry
protability will still be fragile, and airlines will have to navigate
the uncertainties arising from economic and geopolitical
factors, supply chain issues, and regulatory costs to progress
towards improved nancial health. That nancial health is
not only a question of protability, but also of balance sheet
strength. Although pandemic-era public support for airlines
is being repaid (and has been already in a number of cases),
airlines are still left with more debt than prior to the crisis.
This comes at a time when costs are rising and challenges
are mounting, none more impactful than that of the changing
climate.
Air transportation is an industry with remarkable resilience,
able to bounce back swiftly from even a near total cessation
of activities. The world, the transportation sector, and the
aviation value chain, all have an interest in an air transportation
industry that is not only resilient but also robust and able to
withstand various shocks without falling over in the rst place.
This is so because our collective economic outcomes depend
on the free ow of goods and persons – a ow in which air
transportation plays an indispensable and important role.
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