The International Air Transport Association (IATA) has predicted improved industry profitability, with the airlines expected to post a collective global net profit of $19.9bn in 2014, up from $18bn projected in June.
In its ‘Economic Performance of the Air Transport Industry’ report, IATA says that the airlines’ collective profit is further projected to rise to $25bn in 2015.
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Average return fares for air passengers will be 5.1% lower next year compared with 2014, owing to higher profits posted by airlines as a result of cheaper fuel and faster global growth. Cargo rates are also expected to fall by 5.8%.
IATA says that on a passenger basis, airlines will make a net profit of $7.08 in 2015, up on the $6.02 earned in 2014 and more than double the $3.38 earnings a passenger achieved in 2013.
The return on invested capital (ROIC) is expected to grow to 7.0%, which is a marked increase on the 6.1% ROIC expected in 2014.
IATA director general Tony Tyler said: "The industry outlook is improving. The global economy continues to recover and the fall in oil prices should strengthen the upturn next year."
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By GlobalDataTyler advises caution, however, saying that political unrest, conflicts and some weak regional economies can all throw a spanner in the works.
Forecast also differed depending on the region, with North American airlines expected to see the strongest profit margins of 6% next year.
In contrast, European airlines are expected to see profit margins of 1.8%, which IATA says could be due to ‘high regulatory costs, infrastructure inefficiency and onerous taxation’.
Airlines in the Asia-Pacific region are expected to achieve a net profit of $5bn in 2015, up from $3.5bn in 2014 for a 2.2% net profit margin.
Passenger capacity for the Middle East airlines is expected to expand by 15.6% in 2015, up from 11.4% in 2014, representing a profit of $7.98 a passenger and a net profit margin of 2.5%.
Latin American airlines are expected to post net profits of $1bn in 2015, up from $700m in 2014, while Africa will see a marginal improvement with $200m in 2015 which is an improvement on the break-even performance in 2014.
The association also says that it expected airlines to spend $192bn on fuel next year, down from an expected $204bn this year.
The industry body represents 250 airlines, accounting for 84% of global air traffic.
