What do experts predict about air fares in 2024?

The pandemic's impact on the airline industry may soon subside.

Several key metrics have shown stabilization, indicating the end of rapid growth and the start of a new era of normalcy, as evidenced by a review of multiple reports.

According to a December report by the International Air Transport Association, 2024 is predicted to be the year when the significant year-over-year growth that has defined the recovery from 2021 to 2023 will come to an end.

IATA predicts that global flight capacity will be restored to 40 million flights in 2021, with a projected record of 4.7 billion passengers, up from 4.5 billion in 2019.

The commercial airline industry is expected to achieve equilibrium in supply and demand as leisure travel demand decreases and "revenge travel" ends, resulting in stable airfares in 2024, according to Amex GBT Consulting.

Airfares: what to expect in 2024

According to FCM Consulting's "Global Trend Report" for the third quarter of 2023, global airfares are predicted to increase by 3%-7% next year due to airlines facing high fuel costs, sustainability changes, and fleet upgrades.

However, several other reports expect flight prices to soften.

BCD Travel predicts that global fares will decrease by less than 1% in 2024 compared to 2023, with a more significant drop in airfare prices to and from Asia, specifically 3% for business class and nearly 4% for economy, as stated in their "Travel Market Report 2024 Outlook."

Although fares have recently increased, a slight price adjustment may occur in certain markets in 2024, while overall pricing is expected to remain robust.

The "Air Monitor 2024" from Amex GBT predicts that international airfares will decrease in 2024, particularly for flights between North America and Asia. However, regional fares are expected to remain stable or slightly increase.

The travel company Hopper predicts that fares in the U.S. will decrease for the first six months, according to its "2024 Travel Outlook" report.

According to John Grant, the chief analyst at OAG, passengers can expect little change in 2024.

The status quo will continue with minor fluctuations in fare prices, but the high operating costs base, including increased salaries and oil prices, suggest that we will not see a significant shift.

Who’s winning the recovery race?

According to IATA, commercial airlines in three regions are projected to achieve profitability in 2023.

• In 2022, North America will be the "outstanding region" to achieve profitability once again.
• Middle East: strong financial performances expected in 2023 and 2024
• Despite ongoing war and conflict in Ukraine and Gaza, Europe is predicted to have a robust conclusion in 2023.

IATA projects that one more region will become profitable in 2024:

• Despite the resumption of international Chinese travelers, domestic travel in the Asia-Pacific region, particularly in India and China, continues to be robust.

At the end of 2024, two are expected to remain "in the red."

• Despite a strong showing from Mexico, Latin America remains hindered by economic and social upheaval.
• Africa: thwarted by financial, infrastructure, and connectivity issues

Outlook for 2024

In 2023, many airlines reported record earnings, but Amex GBT's Air Monitor 2024 predicts that the landscape may become less favorable in 2024.

BCD Travel's report suggests that global economic growth last year may have been caused by a delay in market reaction rather than a lack of it, despite high inflation and interest rates.

The subduing effects of policy tightening have been slower to transmit into the wider economy than economists had anticipated.

Other pressures facing the industry, such as geopolitical problems, supply chain issues, staffing shortages, and rising fuel and labor costs, were detailed in the report.

The long-awaited return of business travel is expected to pick up in 2024, and several tailwinds may bolster the industry this year.

IATA forecasts that industry revenues and profits will rise in 2024, according to projections.

The association anticipates global revenues to surpass $964 billion dollars next year, resulting in a net profit of $25.7 billion, according to its statement.

The report stated that the net profit margin for 2023 was expected to be 2.6%, but it ended up being 2.7%, which represents a slight increase.

The industry faces significant challenges, including customer competition, high operating costs, and government regulations, according to IATA.

According to IATA's Director General Willie Walsh, the report states that airlines have returned to pre-pandemic levels of connectivity due to people's love for traveling.

While the industry's recovery is impressive, a net profit margin of 2.7% is below what investors in most other industries would expect.