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

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.