The Global Aviation Industry Recovers After Covid-19 'Turbulence'

Data from the International Air Transport Association (IATA), processed by Statista, shows that the estimated profit for the global airline industry reached US$27.4 billion in 2023.

The global airline industry has rebounded after the "turbulence" caused by Covid-19, which resulted in losses for three consecutive years. Recorded net losses were US$137.7 billion in 2020; US$49.4 billion in 2021; and US$3.5 billion in 2022.

Although considered to have recovered, IATA cautions that the net profit margin for the global airline industry is still very thin.

IATA Director General Willie Walsh explained several challenges to achieving stable profits, including a highly competitive downstream environment and a lack of competition in the upstream supply chain, which is characterized by an oligopoly. Burdensome regulations for airlines also pose an obstacle.

IATA projects that industry revenue will reach a record high of US$996 billion in 2024. This is based on an assumption of 38.7 million flights, only 0.2 million fewer than in 2019.

(Read also: [Number of Domestic and International Airline Passengers Soars as of April 2024](https://databoks.katadata.co.id/datapublish/2024/06/04/jumlah-penumpang-pesawat-domestik-dan-internasional-meroket-per-april-2024))

Passenger revenue is expected to reach US$744 billion, exceeding 2019 levels by more than 22%. This figure takes into account the increase in passenger volume and revenue per passenger.

Based on these calculations, net profit is expected to rise to US$30.5 billion in 2024. However, IATA believes this is still insufficient to build financial resilience and a sustainable future for the industry.

“The airline industry is on track towards sustainable profits, but there is still a significant gap to be closed. The return on invested capital of 5.7% is well below the cost of capital of more than 9%,” said Walsh, as quoted by Statista on Monday (June 3, 2024).

Walsh considers the high passenger revenue to be a driving force. He suggests that if the profit margin from each passenger were only US$6.14 based on these calculations, then the airline's profit would be indicated as slightly increased.

"That's barely enough to buy a coffee in many parts of the world," he said.

(Read also: [These Are the Airplanes with the Highest Accident Ratio in the World](https://databoks.katadata.co.id/datapublish/2024/01/09/ini-pesawat-terbang-dengan-rasio-kecelakaan-tertinggi-di-dunia))