The Airline Industry Would Rather You Didn’t Know How Well It’s Doing

The industry just boosted its profit forecast for 2024 but warns that return on invested capital hurts the chance for sustainable profits.

Photo of a JetBlue flight in takeoff
Photo by Nick Morales via Unsplash

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To the airline industry, you’re nothing more than an iced latte. 

The less-than-uplifting insight comes after a report from The International Air Transport Association (IATA) on Monday that attempted to explain why an expected 2024 industry-wide profit of $30.5 billion isn’t as wonderful as it seems.

Smooth Air

The IATA’s semi-annual report raised the industry’s profit forecast for the year by nearly 19% from six months ago and said it expects revenue to climb nearly 10% to $996 billion. “With a record five billion air travelers expected in 2024, the human need to fly has never been stronger,” IATA Director General Willie Walsh said in a press release.

And yes, costs have also jumped: the trade group pointed out that total expenses are expected to rise 9.4% to $936 billion, keeping margins thin and keeping return on invested capital below historical averages. But Walsh and the IATA couldn’t leave it at that: “And earning just $6.14 per passenger is an indication of just how thin our profits are — barely enough for a coffee in many parts of the world.” It’s a good thing then that you can multiply that $6.14 by 5 billion passengers.

Meanwhile, several US airlines have been less sheepish about their success: 

  • Shares of JetBlue were up slightly on Monday after the company raised its revenue forecast for the second quarter, which followed United Airlines reaffirming its Q2 outlook last week.
  • Travelers might be finally getting a break. The latest CPI report indicated that airfare prices fell 5.8% in April from a year earlier, after rising 25% over the past year before that. With demand not relenting, airlines have increased available seats by flying larger planes on domestic routes.

Get Off Our Backs: With the hedge that the industry is merely “on the path to sustainable profits,” the IATA’s report also called for “relief” from “the parade of onerous regulation and ever-increasing tax proposals.” Funny how the feds seemed less onerous when they handed out $25 billion in pandemic bailout money four years ago.