The International Air Transport Association (IATA) forecasts a notable increase in expenses for the airline industry, projected to reach $936 billion, consequently leading to a net profit margin of 3.1%.
According to the forecast, average ticket prices per mile, or yield, are anticipated to rise by 3.2% year over year.
Addressing attendees at the trade group’s annual general meeting held at the JW Marriott Marquis Dubai, IATA Director General Willie Walsh underscored the persistent challenge of thin profit margins within the airline sector. The projected average profit per passenger for this year stands at $6.14, a figure Walsh likened to the cost of a single espresso at the hotel’s coffee shop.
Fleet growth constraints continue to pose concerns within the industry. IATA predicts a total of 38.7 million commercial flights worldwide for the year, marking a reduction of 1.4 million from previous estimates in December. This decrease is attributed to delays in aircraft deliveries, partly due to ongoing supply chain disruptions compounded by quality-control issues at Boeing. Notably, the number of aircraft deliveries scheduled for this year has dwindled by 11% in just a few months, now standing at 1,583.
Walsh highlighted that delivery delays are affecting all airlines, hampering environmental efforts as carriers are compelled to retain older, less fuel-efficient aircraft in their fleets for extended periods.
Despite the challenges posed by delivery delays and supply chain disruptions, Lufthansa Group CEO Carsten Spohr pointed out a silver lining. Unlike previous periods of strong demand when airlines oversaturated the market with excess capacity, the current constraints have prevented such pitfalls.
Spohr remarked during a media briefing that Lufthansa Group airlines are grappling with revenue losses, with approximately 100 out of the group’s 750 aircraft grounded for various reasons, including engine shortages.
IATA’s projections indicate that North America will retain its status as the most profitable region for airline operators globally. North American carriers are expected to achieve a net profit of $14.8 billion this year, boasting a 4.7% profit margin. European carriers are anticipated to follow suit, with a projected net profit of $8.6 billion.
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