The value of new aircraft deliveries globally is set to rise by over 15% to around $100 billion this year as the industry continues to bounce back from groundings of aircraft globally for long periods during the Covid pandemic, and amid unprecedented demand for flights from consumers.
These are among the main findings in a paper published by the global aviation finance company Avolon.
It calculates that the expected delivery of 1,450 new large commercial aircraft will drive passenger revenue at airlines to $717 billion - up 12% - with net profit projected to rise by 10% to $26 billion.
That expected growth comes on the back of a 22% acceleration in airline revenue in 2023.
"A return to positive cashflows has enabled airlines to repay $57 billion of government debt provided during the pandemic," the report notes.
The analysis states that domestic airline capacity has reached 106% of 2019-levels globally, while the recovery in international travel lags slightly, at around 95%.
It attributes that mainly to a slower than anticipated rebound in the Chinese market and the knock-on impact this has had on previously busy routes in Southeast Asia.
Much of the growth this year will be driven by demand in India, Saudi Arabia, and the United Arab Emirates - regions identified in the report as 'key drivers of growth'.
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4.7 billion people are expected to fly in 2024 - more than any year in history - despite concerns about the sustainability of air travel and the effects on the environment.
"Momentum behind sustainable aviation fuel (SAF) is building and an estimated $2 trillion of investment is required to scale up production to levels required to hit net zero goals," the report notes.
"Flying will get more expensive this decade as airlines face tighter labour markets, increasing sustainability pressures, and engine durability challenges," it adds.
Jim Morrison, Chief Risk Officer of Avolon, said today that India, China and the Middle East are driving aviation's growth.
"A structural undersupply of both narrowbodies and widebodies will take years to unwind. While new aircraft designs with step-change improvements in energy consumption will ultimately be required to decarbonise, in the short-term the industry must focus on scaling up sustainable aviation fuel production," he added.
The report also examines the potential impact of the undersupply of aircraft which, it says, will take years to unwind - thus increasing the value of delivered aircraft, and extending their economic lives.
That will likely contribute to a strengthening of the role of lessors in the aviation sector.
"Investment grade lessors that have secured attractive new aircraft orderbooks are best positioned for the years ahead. Market lease rates took time to adjust to higher interest rates, but they have risen as much as 35% in 2023 with further growth expected this year," the report concludes.
