IATA says air sector will earn more in 2016
The International Air Transport Association (IATA) said this week from its annual meeting in Dublin that the global air transport industry will earn US$39.4 billion in profits, more than the US$36.3 billion it forecast in December. These figures compare to the 2015 profit of US$35.3 billion.
The industry should generate total revenues of US$709 billion this year with a net profit margin of 5.6 percent. The trade group said 2016 should be the fifth consecutive year of improving industry profits.
"Lower oil prices are certainly helping, though tempered by hedging and exchange rates”, said Tony Tyler, IATA’s outgoing director general and CEO. “In fact, we are probably nearing the peak of the positive stimulus from lower prices. Performance, however, is being bolstered by the hard work of airlines. Load factors are at record levels. New value streams are increasing ancillary revenues. And joint ventures and other forms of cooperation are improving efficiency and increasing consumer choice while fostering robust competition. The result: consumers are getting a great deal and investors are finally beginning to see the rewards they deserve”.
All regions are making a contribution to the US$4.1 billion boost over 2015 profits with improved results, but there are regional differences in performance. Over half of the industry profits will be generated in North America (US$22.9 billion) while African carriers are forecast to continue generating an overall loss (-US$0.5 billion).
Airlines in Asia-Pacific are expected to post a US$7.8 billion profit in 2016, up from US$7.2 billion in 2015. Capacity is forecast to expand by 9.1 percent in 2016, ahead of demand, which is likely to grow by 8.5 percent. Asia-Pacific carriers have a 40 percent share of global air cargo markets. As a result they continue to feel the brunt of stagnation in this sector, which is holding back the improvement in financial performance. Challenges include intense competition as the budget sector expands, restructuring in the Chinese economy and continuing infrastructure and cost difficulties in the Indian market.