73 CEOs Sign IATA Charter on Aviation Safety Culture

Chinedu Eze

The International Air Transport Association (IATA) has announced that 73 airlines have committed to its Safety Leadership Charter, focusing on passenger and airline staff safety.

IATA said the charter was created in collaboration with airlines worldwide and aviation community members, with the goal to encourage safety cultures through eight principles.

The principles include: Reinforcing safety through both words and actions; Fostering safety awareness among employees, the leadership team, and the board; Guiding the integration of safety into business strategies, processes, and performance measures; and Creating the internal capacity to proactively manage safety and collectively achieve organisational safety goals.

Other principles include: Creating an atmosphere of trust, where all employees feel responsible for safety and are encouraged and expected to report safety-related information; Establishing a working environment in which clear expectations of acceptable and unacceptable behaviors are communicated and understood; Creating an environment where all employees feel responsibility for safety; and Regularly assessing and improving an organisational safety culture.

IATA said 2023 was the best year ever in the commercial aviation industry, noting that last year, no member airlines registered any fatalities, and not one crash occurred on a jet-engine aircraft. A turboprop aircraft crashed in Nepal in January; an ATR 72 operated as Yeti Airlines Flight 691.

IATA’s Director General, Willie Walsh, said: “Strong leadership and strong safety culture are interdependent. And both are needed to drive continuous improvements in safety performance. By putting their names to the IATA Safety Leadership Charter, 73 airline CEOs have set an example for their airlines and for the industry. In doing so, the Charter is a call to action that keeps in focus the critical obligation of airline CEOs to lead a safety culture that keeps their passengers and staff safe.”

In explaining the charter, the global body said the three major points of IATA’s strategy for improving safety in the industry, were safety leadership, safety risk, and safety connect. 

“First, IATA hopes to encourage safety cultures worldwide, which Boeing leadership has discussed since the major Alaska Airlines Boeing 737 MAX 9 door plug blowout in January. Safety risk means that collecting and analyzing data can identify and mitigate risks. Safety connect encourages a transparent culture, enabling leaders to report, discuss, and resolve safety concerns,” the global association said.

IATA had also announced strengthened profitability projections for airlines in 2024 compared with its June and December 2023 forecasts and remarked that an aggregate return above the cost of capital, however, continues to elude the global airline industry.

The outlook highlights indicated that net profits are expected to reach $30.5 billion in 2024 (3.1 per cent net profit margin). That will be an improvement on 2023 net profits which are estimated to be $27.4 billion (3.0 per cent net profit margin). It is also an improvement on the $25.7 billion (2.7 per cent net profit margin) forecast for 2024 profits that IATA released in December 2023.

Return on invested capital in 2024 is expected to be 5.7 per cent, which is about 3.4 percentage points (ppt) below the average cost of capital. Operating profits are expected to reach $59.9 billion in 2024, up from an estimated $52.2 billion in 2023. Total revenues are expected to reach $996 billion (+9.7 per cent) in 2024—a record high.  Total expenses are expected to reach $936 billion (+9.4 per cent) in 2024—a record high. Total travelers are expected to reach 4.96 billion in 2024—a record high and total air cargo volumes are expected to reach 62 million tonnes in 2024.
“In a world of many and growing uncertainties, airlines continue to shore-up their profitability. The expected aggregate net profit of $30.5 billion in 2024 is a great achievement considering the recent deep pandemic losses. With a record five billion air travelers expected in 2024, the human need to fly has never been stronger. Moreover, the global economy, counts on air cargo to deliver the $8.3 trillion of trade that gets to customers by air. Without a doubt, aviation is vital to the ambitions and prosperity of individuals and economies. Strengthening airline profitability and growing financial resilience is important. Profitability enables investments in products to meet the needs of our customers and in the sustainability solutions we will need to achieve net zero carbon emissions by 2050,” Walsh.

He also said: “The airline industry is on the path to sustainable profits, but there is a big gap still to cover. A 5.7 per cent return on invested capital is well below the cost of capital, which is over 9 per cent. And earning just $6.14 per passenger is an indication of just how thin our profits are—barely enough for a coffee in many parts of the world. To improve profitability, resolving supply chain issues is of critical importance so we can deploy fleets efficiently to meet demand. And relief from the parade of onerous regulation and ever-increasing tax proposals would also help. An emphasis on public policy measures that drive business competitiveness would be a win for the economy, for jobs, and for connectivity. It would also place us in a strong position to accelerate investments in sustainability,” said Walsh. 

IATA noted that profitability is expected to strengthen in 2024 as revenues grow slightly faster than expenses (+9.7 per cent vs. +9.4 per cent respectively). Operating profits are expected to reach $59.9 billion (+14.7 per cent from $52.2 billion estimated for 2023); while net profits, however, are expected to grow slightly more slowly at +11.3 per cent, from $27.4 billion estimated for 2023 to $30.5 billion estimated for 2024. 

The international organisation projected that the industry revenues are expected to reach an historic high of $996 billion in 2024.  

“Passenger revenues are expected to reach $744 billion in 2024, up 15.2 per cent from $646 billion in 2023. Revenue passenger kilometers (RPKs) growth is expected to be 11.6 per cent year on year. The long-term 20-year growth trend is expected to see passenger demand grow 3.8% annually for the 2023-2043 period.

Passenger yields are expected to strengthen 3.2% over 2023. When measured in constant 2018 dollars, the real average return airfare in 2024 is expected to be $252, significantly less than the $306 of 2019. This continues the trend of ever-increasing affordability for air travel, even if the figures are somewhat skewed by shorter journey distances in 2024 due to the slower pace of recovery in some long-haul markets.  In line with this, IATA’s April 2024 polling data revealed that 77% of respondents agree that air travel is good value for money.

“The average passenger load factor is expected to be 82.5 per cent in 2024. This is largely in line with pre-pandemic levels (82.6 per cent in 2019) and reflects tight supply and demand conditions from ongoing supply chain issues for aircraft and engines. IATA’s April 2024 polling data aligned with expectations for continued strong performance in passenger markets. Some 39 per cent of respondents expect to travel more over the next 12 months than they did in the previous 12-month period. The majority (54 per cent) said that they expect to travel as much as they did in the previous 12 months. Only six per centreported that they expect to travel less.

Some 46 per cent of respondents expect to spend more on travel over the next 12 months than they did in the previous 12 months. An almost equal proportion (45 per cent) expect to spend the same on travel over the next twelve months while 9% expect to spend less,” IATA also said.