A senior figure in the global airline industry has called on aircraft and engine manufacturers to stop hampering airlines’ efforts at reducing carbon emissions by failing to resolve supply chain issues.
Willie Walsh, Director General of the International Air Transport Association (IATA), said the industry is “united in its commitment to achieving net zero carbon emissions by 2050” but that airlines are “bearing the biggest burden” for implementing practical carbon reduction measures.
“The supply chain issues are a case in point. Manufacturers are letting down their airline customers and that is having a direct impact of slowing down airlines’ efforts to limit their carbon emissions. If the aircraft and engine manufacturers could sort out their issues and keep their promises, we’d have a more fuel-efficient fleet in the air,” said Walsh.
He added, “… the ageing fleet that airlines are using has higher maintenance costs, burns more fuel, and takes more capital to keep it flying.”
Willie Walsh speaking at the 2024 IATA Global Media Event in Geneva.
Walsh, a former British Airways CEO, made his remarks at the launch of a new IATA report that predicts the global airline industry’s annual revenues will “surpass the evocative USD 1 trillion mark.”
The semi-annual Global Outlook for Air Transport report said that, despite facing economic headwinds, airlines are expected to achieve a profit of USD 31.5 billion in 2024, with a record-breaking USD 36.6 billion forecast for 2025. Passenger traffic is also set to grow, exceeding pre-pandemic levels as travel demand continues its robust recovery.
The report highlights that the expansion of what it describes as low-cost carriers (LCCs), particularly in Europe, is contributing to growth in revenue passenger kilometres (RPKs).
“…2025 should benefit from healthy growth in RPKs at 7%, helped by the expansion of LCCs, as they turn their back on the 2024 peak in fleet groundings,” said the report’s authors.
The report also noted that LCC’s increasing market share in the global airline industry had driven growth in ancillary revenue per passenger.
However, the IATA said that airlines in North America have failed to match the profitability increases seen elsewhere, which it attributed to problems faced by the low-fare sector.
“The weaker performance [in North America] is mainly attributable to the LCC segment, which continues to lag since the pandemic.
“The low-cost business model has faced significant challenges, including fleet groundings and delivery delays. The slower next-gen aircraft deliveries and reliance on single aircraft types has particularly affected this segment. Additionally, rising wages have reduced LCC’s competitive advantage against network carriers. Budget airlines are now seeking high-margin revenue streams to offset increasing expenses,” said the authors.
This has prompted LCCs to move away from their traditional “no frills” models and offer enhanced travel experiences, such as extra legroom and meals.
Walsh said that while the overall picture was encouraging, the lack of aircraft availability and supply chain issues were restricting operators’ ability to drive recovery.
“This is a time when airlines need to be fixing their battered post-pandemic balance sheets, but progress is effectively capped by supply chain issues that manufacturers need to resolve,” he said.
Lower oil prices are expected to further boost profitability by reducing fuel costs, which could lead to lower fares for passengers. This is particularly good news for regional airlines, which often operate on thinner margins and rely heavily on passenger revenue.
The IATA report calls for continued collaboration between governments, airlines, and other stakeholders to address these challenges and ensure the long-term health and sustainability of the industry.
Photo: IATA
