Your excellencies, distinguished guests, colleagues and friends,
This year…
- Airlines will connect nearly five billion people over 22,000 routes on 39 million flights.
- And we'll deliver 62 million tonnes of cargo—making possible $8.3 trillion in trade.
Airlines create enormous value by doing all this fast, safely and affordably. The hard work of everyone in this room is helping to:
- Drive economies with tourism, e-commerce, trade and investment,
- Link businesses to global opportunities,
- Support the UN Sustainable Development Goals, and
- Empower people with the freedom of mobility.
Aviation has recovered from the pandemic and is growing profitably to meet the needs of people to fly and to move goods.
Financial Performance
For 2024 we expect record revenues of almost $1 trillion. However, expenses will also be at a record high of $936 billion. Net profit will be $30.5 billion. That's not a record, unfortunately, and represents a net margin of just over 3%. But considering where we were just a few years ago, it is a major achievement.
Importantly, flying remains good value for money. 77% of the 6,500 travelers we recently polled in 15 markets said as much. That's not surprising considering that the real cost of air travel has fallen 34% over the last decade.
For all the value airlines create, how much profit do they retain per passenger? $6.14.
To translate into the coffee benchmark that has become an AGM tradition, that buys one single espresso in this hotel's coffee shop
Now, I don't begrudge their profits. But Governments who love to look to our industry for new tax revenues need to understand that our margins are wafer thin and we rarely earn our cost of capital. This year, airlines in aggregate will earn a 5.7% return on invested capital, and that is well below the average 9% cost of capital.
Nevertheless, we deserve to celebrate the hard work that has brought our industry back from the brink, while acknowledging that we remain squeezed between a fiercely competitive environment downstream and the oligopolistic upstream supply chain's lack of competition. Moreover, the best thing that I can say about the supply chain exasperations of the last years is that they appear to have not gotten worse.
On top of that sits onerous regulation. So, there is still plenty standing in the way of sustainable industry-level profits. But we can do it.
In fact, overcoming these issues to achieve sustainable profitability is critical. That will enable airlines to invest fully in the products our customers want and the tools to get us to net zero carbon emissions by 2050. It will also enable us to expand connectivity—and its economic and social benefits—to waiting people and economies.
Safety
Safety has been and always will be our number one priority and we work hard to continuously improve our safety performance. We never stand still.
That helped make 2023 our safest year by many parameters. There were no fatal accidents among our 336 members or the 433 IOSA registered carriers. Globally, there was one fatal accident claiming 72 lives—a tragic reminder that safety must be earned with each and every flight. And recent severe turbulence incidents have brought that reminder into sharp focus once again.
Our strong safety record and the actions we take to make it even stronger, are built on global standards. 2023 marked 20 years of the IATA Operational Safety Audit (IOSA). It's become a cornerstone of global safety standards. And historically airlines on the IOSA registry have outperformed airlines not on the registry by a factor of nearly three.
IOSA makes a difference. And we are making it stronger. This year we will conduct 100 IOSA audits with a new risk-based model. Doing this adds an extra focus on pertinent safety risks unique to each audited operator.
Additionally, the IATA Global Aviation Data Management program now captures data from 150,000 flights weekly. Applying developing AI capabilities to this data will give us even more powerful insights on safety.
And lastly, we continue to call on safety authorities to publish accident reports in compliance with Annex 13 of the Chicago Convention. It is a dereliction of duty that only 121 reports have been published for the 226 accidents investigated over the last six years. Improving safety needs all three of our top tools: audits, data, and accident reports.
Safety Culture is the glue that brings these tools together and it needs strong leadership. Recognizing the important role that CEOs play in driving safety across their entire organizations, more than 70 have signed on to the IATA Safety Leadership Charter. It's a commitment to eight critical principles for continuously improving safety.
