IBA, the aviation market intelligence and advisory company, has reported that the airline industry has recovered from the pandemic, with the outlook for 2024 showing all regions surpassing 2019 capacity levels, while revenues and yields stabilised in 2023 and early 2024.
According to IBA's latest analysis, global passenger capacity in Available Seat Kilometres (ASKs) as of September 2024 has reached 104% of pre-pandemic levels. The region demonstrating the highest increase compared to 2019 is Latin America, with airline capacity now averaging 119% of pre-pandemic levels. This is followed by Africa at 115%, North America and the Middle East at 108% and 104% respectively, and Asia Pacific and Europe both at 101%.
IBA also revealed that global airline revenue grew by 23.1% on average in 2023 compared to 2022, while passenger numbers rose by 28.3% and Revenue Passenger Kilometres (RPKs) increased by 33% on average over the same period. Data from the IBA Airlines reporting tool highlighted that 2023 marked a significant year of stability for the global airline industry, with notable gains seen only in the Asia-Pacific region, where airline revenue surged by 48.7%.
This robust growth was largely driven by major Chinese carriers and the surrounding region. However, many of these carriers have adopted a high-volume approach, often sacrificing yield, especially in Singapore and Korea. IBA's data indicates potential challenges ahead for some airlines, with growth continuing but at the expense of profitability.
In Europe, yield declines were reported in Q2 2024 across major carriers, with Ryanair showing a revenue drop of around 1.8% despite a 22% increase in passengers.
Looking forward, many airlines are adjusting to higher debt levels and must remain vigilant as low-cost debt matures and transitions to higher rates. Since 2019, the global average net debt has risen to 111.8%. North American carriers carry the heaviest debt burden, with average levels rising to 150.9% over the same period. In contrast, Middle Eastern airlines have achieved the lowest net debt, dropping to 71.5% by 2023.
IBA's standardised financial analysis highlights improved quick ratios for airlines, indicating enhanced immediate liquidity, even as asset turnover remains flat. This suggests that despite record revenues, airlines are not extracting greater returns from their assets. Latin America and Europe led in asset turnover in Q2 2024, each achieving a rate of 0.76. For Europe, however, this is a slight decline from its 2023 turnover rate of 0.78, whereas Latin America has remained consistent.
Notably, quick ratios have risen globally in 2024 across all regions, with the Middle East experiencing the most significant increase, from 0.93 to 1.11, despite a decrease in asset turnover from 0.61 to 0.54.
IBA's Operator Score Index, which considers financial and operational factors such as financial performance, fleet structure, and operation, along with qualitative data, shows a forecasted global weighted average score of 73% for 2024, consistent with 2023 and up from 70% in 2022, indicating a modest upward trend in overall airline operational performance.
However, a widening gap in operator scores between market leaders and higher-risk airlines is becoming evident, particularly among those facing rising engine maintenance costs. This challenge is especially pronounced in regions like Africa, where regulatory and financing hurdles remain significant.
As the aviation market continues to evolve, IBA noted that effective risk management during aircraft leasing is becoming increasingly critical for leasing companies. This involves closely monitoring utilisation data, fostering strong communication with airlines, and conducting regular inspections to pre-empt maintenance issues, ensuring both operational efficiency and safety.
