Global aviation sector may never recover lost covid growth – PwC

PwC reports an optimistic outlook for aviation going into 2025 — but the sector will struggle to recover growth lost to the pandemic

Airlines who are members of the International Air Transport Association flew 4.89 billion passengers in 2024, an increase of 10.2%.

There is an optimistic outlook for the global aviation sector going into 2025 following a year that surpassed expectations but it is ‘unlikely’ the lost growth in passenger numbers from over the pandemic will ever be recovered, a new report by consultancy firm PwC has said.

This report comes as global aviation finance firms — who own more than half of the global passenger fleet — meet in Dublin this week for their annual flagship conference, Growth Frontiers Global. In addition, daa is set to publish data on the 2024 performance of Dublin and Cork Airports on Tuesday.

According to PwC’s 2025 Aviation Industry Review and Outlook, 2024 turned out to be better than the International Air Transport Association (IATA) had predicted with profitability being 23% ahead of IATA’s forecast in December 2023.

However, airline net profit was still 10% behind 2023 levels.

IATA’s member airlines carried 4.89bn passengers in 2024, an increase of 10.2%.

There was some relief for airlines with a 12% drop in the price of fuel during 2024 with prices expected to moderate further over the coming year. Non-fuel costs increased by 11%, reflecting the pressures of wage inflation and operating cost increases.

Senior aviation finance consultant at PwC Ireland and author of the report Dick Forseberg said the global aviation sector will benefit from a robust economy, lower oil prices, and a modest reduction in interest rates.

“Supply chains continue to present challenges but should gradually improve,” Mr Forseberg said.

This can only come with the passage of time and we, therefore, expect production rates to remain below projections and market demand for most of the second half of the decade.

He added that, despite challenges faced by airlines over the last two years, “airlines carried more passenger and cargo traffic at higher average load factors in 2024 compared to 2023” which “are good reasons for optimism heading into 2025 and beyond”.

The report noted that traffic in the period from January to October last year was 5% higher than for the same period in 2019 with Europe’s progress slightly slower at 4%.

“However, five years of compounding growth should have produced 25% growth by now. It is unlikely that this shortfall will ever be recovered,” the report said, citing the reduced traffic during the pandemic.

One of the biggest challenges facing the aviation industry globally is the shortfall in commercial aircraft and the delay in deliveries from manufacturers, particularly Boeing, which has been experiencing a raft of problems over the last year which have significantly impacted deliveries.

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According to the report, the global aviation industry is managing a shortfall of more than 4,500 commercial aircraft with missed deliveries commitments in 2024 accounting for 560.

Aircraft deliveries were 20% below expectations in 2024, resulting from aircraft non-availability due to engine unserviceability or component unreliability. PwC said: 

These supply chain challenges are likely to continue for much of the decade, leaving airlines to deal with disruptive and costly network and fleet planning challenges for several years to come. 

In addition to this, the average age of the global commercial fleet now stands at 14.8 — the highest on record and well above the 13.6 year long-term average.

Aircraft leasing companies, many of which are headquartered in Ireland, have benefited significantly from the airplane production capacity issues over the last few years. PwC said that last year saw “virtually all” remaining flyable aircraft on lessors’ books placed on lease.

However, the report said this shortfall may also impact lessors’ long-term growth strategies and other avenues for expansion may need to be considered.