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Global cargo revenues are predicted to slip to $120 billion this year from $138 billion last year, the International Air Transport Association projected recently
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A 17.5% drop in cargo yields is also expected this year
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Total air cargo volumes to reach 62 million tons in 2024
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Net profits of global airline industry seen hitting $30.5 billion this year from $27.4 billion in 2023
Global cargo revenues are predicted to slip 13% to $120 billion this year from $138 billion last year, the International Air Transport Association (IATA) projected recently.
Both figures were down from the “extraordinary peak” of $210 billion in 2021, but above 2019 revenues of $101 billion and an improvement on the previous forecast of $111 billion (announced in December 2023).
Strong demand notwithstanding, cargo yields are seen to fall 17.5% this year, while remaining just above 2019 levels.
IATA sees this as a normalization after extraordinary pandemic highs. A key factor in this is the significant belly capacity that entered the market in 2023 in tandem with the recovery of passenger travel.
Overall, air cargo is in a period of correction following the banner year that was 2021, IATA said. Yields, capacity growth, the belly dedicated freighter split, and other key metrics are moving towards a continuation of pre-pandemic levels.
Total air cargo volumes are seen to reach 62 million tons in 2024, while total travelers are seen to reach a record high of 4.96 billion.
READ: Global air cargo demand sustains growth in April
Meanwhile, net profits of the global airline industry are expected to hit $30.5 billion this year, an improvement over last year’s $27.4 billion, IATA said.
In a statement, IATA director general Willie Walsh said despite many uncertainties, “the expected aggregate net profit of $30.5 billion in 2024 is a great achievement considering the recent deep pandemic losses.”
Walsh added that the global economy depends on air cargo to deliver the $8.3 trillion of trade that gets to customers by air.
Profitability enables investments that “we will need to achieve net zero carbon emissions by 2050,” according to the IATA head.
Despite the expected profitability, the expected 5.7% return on invested capital is still well below the cost of capital, said Walsh, who added that earnings of just $6.14 per passenger is “barely enough for a coffee in many parts of the world.”
To improve profitability, IATA would like to see supply chain issues resolved, relief from onerous regulation and ever-increasing tax proposals.
For the passenger segment, revenues are expected to hit $744 billion this year, an increase of 15.2% from last year’s $646 billion. Passenger demand is seen to grow 3.8% annually for the 2023-2043 period.
The average passenger load factor is expected to be 82.5% this year.
Industry revenues are seen to hit a historic high of $996 billion in 2024. IATA’s April 2024 polling data aligns with expectations for continued strong performance in passenger markets.
Industry expenses are expected to rise to $936 billion this year. Fuel will likely average $113.8/barrel this year, for a total bill of $291 billion. This accounts for 31% of total operating cost.
CO2 emissions are expected to be 935 million tons from consumption of 99 billion gallons of fuel this year.
Total employment in airlines is seen to hit 3.07 million, slightly exceeding the 2.93 million employed in 2019.
Expected to be available this year is an inventory of 38.7 million flights, which is 1.4 million less than previous estimates. This is attributed to the slowing pace of deliveries caused by persistent supply chain issues.
Airlines are deploying larger aircraft as a mitigating strategy.
Profitability of the industry remains fragile and could be affected by a number of factors including global economic developments; the Russia-Ukraine and Israel-Hamas wars; supply chain issues; regulatory risk such as the rising cost of compliance; and public policy with possible shifts in the global political landscape.
