2024 — A Year of Growth, Challenges, and Innovation

At the end of 2024, the commercial aviation sector stood as a testament to resilience and adaptability, marked by a year of recovery, innovation, and transformative trends. From record-breaking passenger traffic to advancements in sustainable aviation fuel (SAF) and continued geopolitical challenges, here are some key highlights from the year.

2024 marked a milestone as global passenger traffic returned to pre-pandemic levels, driven by strong travel demand. However, restricted capacity led to higher airfares, with airlines benefiting from improved load factors and reduced fuel prices, although rising non-fuel costs offset gains. Supply chain disruptions were a significant hurdle, with delivery delays and increased maintenance needs limiting airlines’ ability to modernise fleets and improve efficiency. These challenges raised fleet ages, inflated maintenance costs, and boosted demand for leasing services. Meanwhile, MRO providers and aircraft lessors reaped record profits as industry growth remained constrained. Despite the obstacles, operating profits for airlines stayed historically high, supported by the favorable market dynamics of 2024.

However, among the highlights, many accidents also occurred during 2024, turning emphasis on safety. A total of 318 people died in plane fatalities this year, according to data from the Aviation Safety Network. This marks the deadliest year in aviation since 2018, when 557 people died on commercial flights.

PASSENGER TRAFFIC REACHES NEW HIGHS

Passenger demand continued to soar in 2024, surpassing pre-pandemic levels across all regions. According to IATA, global passenger traffic increased by 6.3 per cent year-on-year, driven by robust leisure travel and growing business demand as economies stabilised. The Asia-Pacific region led the recovery, with China’s reopened borders fueling a surge in international travel. North America and Europe also posted strong growth, reflecting heightened transatlantic travel.

SUSTAINABLE AVIATION GAINS MOMENTUM

Sustainability remained a dominant theme, with airlines and governments accelerating their push towards net-zero emissions by 2050. SAF production doubled compared to 2023, reaching 1 million tonnes, but still accounted for only 0.3 per cent of global jet fuel use. Major airlines like Delta, Emirates, and Lufthansa announced large-scale SAF procurement agreements, while new SAF pathways, including Alcohol-to-Jet and Fischer-Tropsch technologies, gained traction.

Governments played a critical role, with the EU implementing SAF mandates as part of its Fit for 55 package, and the US expanding tax incentives for SAF production under the Inflation Reduction Act. However, the high cost of SAF, at 2-5 times that of traditional jet fuel, remains a significant barrier to widespread adoption.

FLEET EXPANSIONS AND NEW AIRCRAFT DELIVERIES

The industry continued to grapple with supply chain disruptions in 2024. The estimated aircraft deliveries for the year stood at 1,254, representing a 30 per cent shortfall from initial projections. These constraints affected both production rates and the ability to meet the surging demand for air travel, posing challenges for manufacturers and airlines alike.

Though major aircraft manufacturers had a busy year as demand for new, fuel-efficient aircraft surged. Boeing delivered over 600 aircraft, including its revamped 737 MAX models and the much-anticipated 777X which made its debut in India in January 2024 during Wings India. Airbus had a great year too with 720 deliveries, highlighting strong orders for the A321XLR, which promises extended range for narrow-body operations. By the end of November 2024, Airbus had nearly 900 orders for the A220 (with 380 delivered) and 1,345 orders for the A350 Family, including 55 A350F models for cargo carriers. By mid-December, over 500 A321XLRs were ordered, while A321neo orders surpassed 6,700 from more than 90 customers globally. Air India officially confirmed its earlier orders for 10 A350 widebodies and 90 A320 Family aircraft.

2024 marked a milestone as global passenger traffic returned to pre-pandemic levels, driven by strong travel demand, despite restricted capacity leading to higher airfares

In November, Airbus delivered 84 aircraft, up from 62 in October, while Boeing delivered just 13, down from 14 in October, due to a strike involving 33,000 workers. With the strike ending in early November, Boeing resumed production across all programmes by mid-December. Year-to-date, Airbus delivered 643 aircraft, matching its 2023 performance, while Boeing delivered 318, trailing last year’s 461 deliveries. Airbus maintained its lead as the top aircraft deliverer for the sixth consecutive year.

Embraer delivered 75 aircraft in 4Q24, a 27 per cent increase from 3Q24, totaling 206 aircraft for 2024—a 14 per cent rise from 2023. In commercial aviation, 73 aircraft were delivered, hitting the upper end of its revised guidance.

In regional aviation, Embraer and ATR saw strong demand for their turboprop and regional jet offerings, particularly in developing markets in Asia and Africa. The freighter market remained robust, with Boeing’s 777F and Airbus’s A350F securing key orders from cargo operators.

CARGO MARKET STAYS STRONG

While global air cargo demand softened slightly from its pandemic peak, 2024 proved to be another strong year. Cargo tonne-kilometers (CTKs) grew by 11.8 per cent year-on-year, driven by surging e-commerce and supply chain disruptions in maritime shipping. Yields stabilised at levels 35 per cent higher than pre-pandemic benchmarks, bolstered by semiconductor shipments and the resilience of cross-border e-commerce. The cargo market has lent significant support to airline traffic in 2024. Demand surged thanks to effervescent cross-border e-commerce and capacity limitations in ocean shipping. The outlook for 2025 remains strong, given the ongoing challenges in maritime shipping. Global yields for air cargo stopped declining in 2023 and are now around 30 per cent above pre-pandemic levels.

TECHNOLOGICAL ADVANCEMENTS

The industry continued to embrace innovation, with advancements in electric and hydrogen-powered aircraft taking center stage. Airbus unveiled its hydrogen-powered ZEROe concept, while startups like Eviation and Heart Aerospace conducted successful test flights of electric regional aircraft.

Boeing forecasts a $4.4 trillion demand for commercial services and 2.4 million new aviation personnel over the next 20 years, while Airbus projects global air traffic to double by 2043

Airports adopted cutting-edge technologies, including biometric check-ins and automated baggage systems, to enhance passenger experiences. Meanwhile, digital twin technology gained popularity for predictive maintenance and operational efficiency.

GEOPOLITICAL AND ECONOMIC CHALLENGES

The year was not without its challenges. Geopolitical tensions, including the ongoing war in Eastern Europe, impacted airspace availability, forcing airlines to adopt costlier, longer routes. Rising inflation in key markets also strained consumers’ spending power, prompting some airlines to adjust capacity and pricing strategies.

Additionally, labour shortages continued to challenge the industry, particularly in Europe and North America, where strikes disrupted operations during peak seasons. Airlines responded by increasing wages and improving working conditions to attract talent.

RIPPLE EFFECTS OF LOWER OIL PRICES

Brent crude oil prices have dropped by 20 per cent over the past year, driven by oversupply from the US, now the world’s leading oil producer, and shifting energy demands, particularly in China. This decline, unrelated to a weakening global economy, has stabilised global GDP at 3.2 per cent. Lower oil prices bring significant benefits, including reduced headline inflation, enabling monetary policy easing and potentially weakening the US dollar, which supports household spending and global growth. Oil-importing nations benefit through improved current accounts and stronger financial positions. This scenario presents an opportunity to redirect fossil fuel subsidies, which totaled $7 trillion in 2022, towards renewable energy investments. Such a redirection could finance the entire energy transition for airlines by 2050. Airlines will benefit from lower crude oil prices as long as jet fuel prices decline in parallel. Fuel is airlines’ largest cost component, representing 30 per cent of total costs.

GLOBAL AVIATION FORECAST: INSIGHTS FROM BOEING AND AIRBUS

Boeing projects the global commercial fleet to grow 3.2 per cent annually, supported by optimised airline operations and a two-thirds expansion of the air cargo fleet to meet a 4.1 per cent annual rise in cargo demand. South Asia, Southeast Asia, and Africa will lead passenger traffic growth, while Eurasia, North America, and China will account for the majority of airplane deliveries. Single-aisle aircraft will dominate future fleets, while the widebody fleet doubles, especially in the Middle East. Boeing also forecasts a $4.4 trillion demand for commercial services and 2.4 million new aviation personnel over the next 20 years.

Airbus highlights robust recovery post-pandemic, forecasting air traffic to double by 2043, with an eight per cent annual growth initially stabilising at 3.6 per cent from 2027. More than 42,000 new aircraft, replacing older models, will reduce fuel consumption and support decarbonisation efforts through sustainable aviation fuels (SAF), hydrogen, and hybrid technologies. Currently, only 30 per cent of the global fleet comprises next-generation aircraft, underscoring the need for innovation to meet long-term sustainability goals.

Both forecasts emphasise strong growth, sustainability, and the pivotal role of emerging markets in shaping aviation’s future.

WIDEBODY, NARROWBODY, AND CONNECTIVITY HIGHLIGHTS

The aviation sector in 2024 witnessed notable developments in widebody aircraft, narrowbody innovation, and inflight connectivity (IFC). STELIA Aerospace led in business class seat installations for widebodies, followed by Safran, Collins Aerospace, and Thompson Aero Seating. Narrowbody aircraft gained prominence on long-haul routes, with Collins dominating the premium seating market, trailed by Safran and RECARO. China Southern Airlines retrofitted Boeing aircraft with AVIC seats and received AVIC-equipped A320neo deliveries, highlighting China’s growing aviation capabilities.

Sustainable aviation fuel (SAF) production doubled compared to 2023, reaching 1 million tonnes, though it still accounted for only 0.3 per cent of global jet fuel use

Starlink’s expansion disrupted the IFC market, introducing free connectivity on Qatar Airways, airBaltic, and Hawaiian Airlines, with commitments from Air France, United Airlines, and WestJet. Other carriers, including ANA, British Airways, and Japan Airlines, also joined the free WiFi trend. Airbus launched its HBCplus service with Emirates and Ethiopian Airlines while securing deals with several global airlines. However, Viasat maintained its lead in IFC installations, capturing 64 per cent of new deliveries in 2024, as these transformative trends began reshaping passenger experiences.

ASIA PACIFIC AIRLINES

In 2024, Asia Pacific’s airline industry faced challenges on its path to full international recovery, reaching 94 per cent of 2019 capacity while other regions surpassed pre-pandemic levels. International seat capacity grew four per cent since early 2024 and 16 per cent year-on-year. Despite recovery, tourism-dependent countries like Thailand, where visitor numbers remain 13 per cent below 2019, felt the lingering effects, particularly from China, whose visitor traffic is only 55 per cent recovered.

China’s international capacity stands at 78 per cent of 2019 levels, with major carriers nearing full recovery. The Hong Kong market is at 83 per cent of pre-pandemic capacity, while Japan has seen a 26 per cent increase in inbound visitors compared to 2019, though outbound travel lags. Low-cost carriers (LCCs) now hold 31 per cent of the region’s capacity, highlighting growing demand for affordable travel.

Aircraft orders in the Asia Pacific region remained robust, with 7,200 on order—double that of North America or Europe—despite supply chain constraints limiting fleet expansion. Delays in aircraft deliveries and engine maintenance bottlenecks have frustrated growth ambitions, though constrained capacity has kept yields high. Financial performance varied across the region, with profitability tempered by elevated costs and geopolitical tensions.

LOOKING AHEAD

As 2024 concluded, the commercial aviation sector stands poised for further recovery and innovation in 2025. Passenger demand is expected to grow, bolstered by pent-up travel aspirations, while sustainability and digital transformation will continue reshaping the industry. However, challenges like geopolitical tensions, supply chain disruptions, and the high cost of SAF will require ongoing collaboration between industry stakeholders and governments.

In 2025, airlines’ revenues are expected to surpass the evocative $1 trillion mark. The top-line growth and lower fuel prices should translate into higher profitability. We forecast a net profit of $36.6 billion—a record high for the industry—at a still meager 3.6 per cent net profit margin.