An airline sector boss says airlines are making the equivalent of the price of a cup of coffee - albeit an expensive one - out of each passenger carried. International Air Transport Association (IATA) director general Willie Walsh said profitability projections had strengthened so far this year but margins were under pressure. “The airline industry is on the path to sustainable profits, but there is a big gap still to cover,” he told the association’s annual meeting in Dubai.
He warned that prices will rise as airlines pay for more Sustainable Aviation Fuel (Saf), which is up to three times the price of conventional jet fuel. Walsh said a 5.7 per cent return on invested capital is well below the cost of capital, which is over 9 per cent.
“And earning just US$6.14 ($10) per passenger is an indication of just how thin our profits are — barely enough for a coffee in many parts of the world.” He said a coffee in the lobby of the JW Marriott Marquis Hotel in Dubai - the meeting’s venue - was about that price.
The association represents 330 airlines and in the current year net profits are expected to reach US$30.5 billion - a 3.1 per cent net profit margin.
That will be an improvement on 2023 net profits which are estimated to be US$27.4b (3 per cent net profit margin). Total revenues are expected to reach $996 billion in 2024, a record high and up 9.
7 per cent. Total expenses are expected to reach $936 billion ( up 9.4 per cent) in 2024, also a record high.
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