Monday, August 12, 2024 After experiencing a significant decline due to the COVID-19 pandemic, global airline fuel spending has been steadily increasing and is poised to set a new record this year. Stocklytics.com reports that the global airline industry is projected to spend an astounding $291 billion on fuel in 2024, which is $100 billion more than five years ago.
Rising Fuel Costs with the Same Consumption Levels Although it’s common for one of the world’s largest fuel consumers to spend hundreds of billions of dollars on fuel annually, airlines today are paying much more for the same amount of fuel as they did five years ago. The latest Air Transport Global Outlook by the International Air Transport Association (IATA) highlights this significant price disparity. In 2019, airlines globally used 96 billion gallons of fuel, costing them around $190 billion.
The pandemic caused these figures to drop by nearly 50%, with fuel spending falling to $80 billion in 2020. Despite a tough 2021, the market rebounded in 2022. As air travel normalized, the industry’s fuel usage rose to 77 billion gallons, with total fuel spending reaching $215 billion, a 13% increase from pre-pandemic levels.
This upward trend continued over the past two years. However, the IATA survey revealed a concerning pattern: although global airline fuel usage has almost returned to 2019 levels, fuel prices have not. Consequently, airlines are paying significantly more for the same fuel volume.
Projections indicate that the same fuel volume in 2024 will cost $100 billion, or 53% more than in 2019. Due to this substantial rise, fuel expenses will account for about 32% of airlines’ total spending this year, up 7% from five years ago. This dramatic increase is largely attributed to the ongoing conflicts involving Russia, Ukraine, Israel, and Palestine, which have sharply driven up gasoline and jet fuel prices.
With these conflicts showing no signs of resolution, fuel prices are expected to rise further next year. Record Revenues to Offset Soaring Fuel Costs While 2024 will see the highest fuel costs in the airline industry’s history, this surge could be offset by highly optimistic market projections. IATA data shows that total traffic matched and surpassed 2019 levels in February this year and has been growing ever since.
With global flight demand rising, the number of airline passengers is expected to reach nearly five billion by the end of 2024, 400 million more than before the pandemic. Besides achieving a record number of passengers, the airline industry is also set to generate unprecedented revenue. Statistics indicate that the global airline industry revenue will approach one trillion dollars in 2024, $158 billion more than in 2019.
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