IATA forecasts tough year for airline operators
23 Sep 2011
The International Air Transport Association has forecast that the global aviation industry will make profits of almost US$7-billion this year but warns that the recovery in air travel is weak as tourism levels are down in the wake of the global economic uncertainty.
It says that net profit margins of just 1,2% are still exceptionally low when viewed against the turnover for the airline industry of $594-billion for the year. It says that airlines will make a little bit more money than it had previously forecast but given the high oil prices and the widespread economic uncertainty the outlook for airline companies remained gloomy.
IATA's director-general and chief executive Tony Tyler says that the $29-billion improvement in profits for the year is miniscule and amounts to about half a percent of total revenue. He expects next year to be even more difficult for airline operators.
The forecast is based on global economic growth of about 2,4% but the reality is that economic growth worldwide has fallen to below 2% and whenever this has happened in the past, Tyler says, airline operators have started to lose money.
IATA says that African operators are expected to break-even in 2011 from a $100-million loss in its previous forecast. It says that Africa has been hurt by the political unrest and wars in North Africa and this will dent profitability.
Moreover, growing competition from international carriers on popular routes are making it more challenging for African airline operators to maintain profits.
About Paddy Hartdegen
Paddy Hartdegen has been working as a journalist and writer for the past 40 years since his first article was published in the Sunday Tribune when he was just 16-years-old. He has written 13 books, edited a plethora of business-to-business publications and written for most of the major newspapers in South Africa.
