PwC has predicted that the 737 MAX 7 and 10 will not receive certification in 2024 in its 2024 Aviation Industry Review & Outlook report, after correctly predicting the same outlook for 2023. The report also predicts airline profitability to exceed IATA's 2024 outlook of $49bn operating profits and net profit of $23bn, boosted by strong demand and robust pricing power.
Passenger traffic is expected to exceed 2019 levels in all regions in 2024, however recovering the downturn experienced by the COVID-19 pandemic is still a long road ahead. PwC Ireland senior aviation finance consultant and the report's author Dick Forsberg commented: "This outcome is materially ahead of mid-year expectations largely due to the airlines’ ability to pass on cost increases to passengers which, on top of the demand-driven pricing opportunity, resulted in fares that in many markets were 20-30% higher in 2023 than pre-COVID."
Furthermore, aircraft values will recover more in 2024, with widebodies outpacing narrowbodies. The supply chain issues with a production backlog of 14,500 aircraft will still persist throughout the year, with western OEMs expected to deliver more than 1,500 aircraft. Another key issue Forsberg identified is for airlines to embark "on the journey towards decarbonising the industry" in 2024 with the industry facing greater responsibility in sustainability reporting this year, with greater pressure felt by airlines, lessors, and financiers. The report added: "2024 will be the year when it becomes possible to see a real path to 5-10% sustainable aviation fuel (SAF) by 2030."
PwC Ireland's aviation finance leader Brian Leonard said: "2024 will be a year where airlines continue to restructure, improve profitability and ESG metrics, which will become increasingly important in the eyes of travellers and financiers."
More lessor consolidation is expected for the year, but few new entrants for the industry along with a marked uptick for aircraft trading. The reported also highlighted that "investor appetite for aviation assets will increase, through direct lessor platform investments or via deployment of managed funds."
AI was the hot topic of 2023, not just in the aviation industry, but across all industries globally. The trend will not be bucked quite yet, with generative AI (GenAI) expected to become more widely used in the aviation sector as it begins to experiment with its potential. Forsberg said that AI provides the opportunity to "achieve cost savings, efficiencies and customer loyalty." Generative AI utilisation is expected to be rapidly expanded into airline, OEM, MRO, and leasing operations.
The report stated: "The opportunities are immense from realising unprecedented growth, greater personalisation and operational efficiencies. From analysis of vast amounts of data, enhancing customer service, improving lessor profitability, GenAI has the power to reshape the entire aviation industry. However, it must be understood and used with care.
