In the first installment of our "2024 Lookout" series, we examine the progress on the post-pandemic recovery of the airline industry and they key themes that could shape it into 2024. Also in focus, the Boeing-Airbus rivalry and the potential launch of the first eVTOLs (electric vertical take-off and landing aircrafts)
The airline industry has been recovering from the crippling pandemic breakout and flight demand has almost fully recovered, with people eager to fly. According to the International Air Transport Association (IATA) global traffic was at 97.3% of pre-COVID levels as of September, helping airlines repair their balance sheets. 
Ryanair (RYA.ie) registered record summer traffic with 105.4 million passengers during that period. It posted a 59% y/y surge in profits (PAT) in H1 FY2024 (six-months ended September 2023), forecasting new all-time highs for the full fiscal year. Lufthansa also had a record summer with its net income up 29% y/y in the third quarter , while Delta Air Lines saw a jump of 60% y/y.
However, carriers face a series of challenges, which could persist and may even strengthen in 2024. High inflation and pricier fares are good for revenue, but could dent demand at a time when traffic is nearly fully restored and revenge travel appears to be over. Geopolitics is a risk source, with the war in Ukraine still ongoing and a new conflict having recently erupted in the Middle East. Such factors can affect travel schedules, jack up fuel costs and eat into profitability.
Moreover, the industry is struggling to meet its staffing needs after the pandemic cutbacks and respond to the resurgent demand. Consulting firm Oliver Wyman for example, projects a shortage of pilots in North America to the tune of 17,000 next year, with the supply/demand gap peaking in 2026 at 24,000 pilots. 
In a warning sign, Ryanair's full FY2024 guidance suggests modest losses in the second half, which covers the period from October 2023 up to March 2024. On the other hand, the Airports Council International (ACI) views 2024 as a "milestone for global passenger traffic recovery", expecting it to surpass the 2019 level. 
The significant M&A activity of the previous decade (Air France-KLM, IAG) has continued into the current one and it will be interesting to see how this consolidation trend progresses into 2024. This year, Lufthansa acquired 41% of Italy's ITA, with the option to gobble up all remaining shares  and Scandinavian SAS agreed to sell 20% to Air France-KLM , while TAP Portugal Air is heading towards privatization.
In another segment of the aviation industry, the rivalry and duopoly between the two largest commercial plane makers, will be closely watched. Boeing took a one-two punch from the grounding of its 737 Max after two fatal crashes (2018 & 2019) and the pandemic breakout that brought traveling to halt. This allowed Airbus to surpass it in deliveries in 2019 and stay ahead since. Boeing however is making a comeback and clinched nearly 300 orders in November's Dubai Air Show, compared to less than 100 by its European competitor.
It is also worth monitoring the evolution of the Commercial Aircraft Corporation of China (COMAC), which launched the C919, looking to challenge the Airbus A320neo and the Boeing 737Max. It went into commercial operation in May and China Eastern Airlines has already placed a massive order of 100 aircrafts, with deliveries set to begin next year. 
Electric vertical take-off and landing aircrafts (eVTOLs) are poised to capture increasing attention from 2024 onwards, with a flurry of companies developing such planes. According to Custom Markets Insights, the Advanced Air Mobility (AAM) market will be worth $14.1 billion this year and projected to reach $68.1 billion in 2032, at a compound annual growth rate (CAGR) of about 35.2%. 
German startup Volocopter has committed to launch its commercial electric air taxi service next year, in cities like Paris and Singapore . Chinese air mobility firm Ehang aims to become the first to launch an unmanned eVTOL and has already gotten approval for test flights. 
Over in the US, Joby Aviation (JOBY.us) is one of the most prominent players and conducted an exhibition flight of its eVTOL in New York in November. It has partnered with Delta Airlines for city-to-airport transportation of its clients and expects to initiate commercial passenger service in 2025 . Rival Archer Aviation (ACHR.us) is looking to ramp up its testing program next year, so that it will bring its eVTOL to market in 2025. 
The start of public flights is of course dependent on relevant regulatory approvals, but significant milestones have already been achieved.
The resurgent travel demand has helped carriers recover and it looks like better days could lie ahead. However, we have already seen various factors that could make it hard for airliners to maintain the momentum and the external environment is not particularly friendly. The increased traffic translates to more plane orders, with Boeing and Airbus experiencing an uplift. Over recent years, we have seen progress on a nascent segment of the aviation industry, that of eVTOLs. A step up in trial activity is likely in 2024, while the first commercial flights could also begin.
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.