By Aduragbemi Omiyale
A new report from Stocklytics has revealed that the global airline industry would spend about $291 billion on fuel in 2024, which is about $100 billion more than five years ago.
After a significant drop caused by the COVID-19 pandemic, global airline fuel spending has been continually rising and is on the brink of setting a new record this year.
In 2019, airlines worldwide spent 96 billion gallons of fuel, which cost them roughly $190 billion, and after the pandemic hit, these figures plummeted by almost 50 per cent, with airline fuel spending falling to only $80 billion in 2020.
But the entire market bounced back in 2022 after a challenging period a year earlier, causing the industry’s fuel usage up to 77 billion gallons that year after airline travel returned to normal, while the total fuel spending hit a massive $215 billion or 13 per cent more than before the pandemic.
The increasing trend continued in the past two years, but the International Air Transport Association (IATA) survey revealed a worrying trend; although global airline fuel usage had almost returned to 2019 levels, fuel prices had not. As a result, airlines are paying much more money for the same amount of fuel.
While it’s become quite usual for one of the world’s biggest fuel consumers to spend hundreds of billions of dollars on fuel each year, today, airlines are spending much more on the same amount of fuel as five years ago.
Statistics show a similar fuel volume in 2024 is forecast to cost $100 billion or 53 per cent more than in 2019. Thanks to this massive increase, fuel costs will make up around 32 per cent of overall airline companies’ spending this year, 7% more than five years ago.
This massive increase is mainly attributed to Russia’s war with Ukraine and the conflict between Israel and Palestine, which significantly drove up gasoline and jet fuel prices. With both conflicts unlikely to cease soon, fuel prices will probably be even higher next year.
The report stated that although 2024 will bring the highest fuel cost the airline industry has ever seen, this spike could be mitigated by more than optimistic market projections.
The IATA’s data show total traffic matched and surpassed 2019 numbers in February this year and has continued growing ever since.
With the global demand for flights rising, the total number of airline passengers is projected to reach almost five billion by the end of 2024, or 400 million more than before the pandemic.
Besides reaching a record number of passengers, the airline industry will also generate more revenue than ever. Statistics show the global airline industry revenue is expected to gross almost one trillion dollars in 2024 or $158 billion more than in 2019, it further said.
Modupe Gbadeyanka