Eurozone crisis overtakes fuel
The Eurozone crisis has overtaken soaring fuel costs as the largest threat facing the global aviation industry, according to the International Air Transport Association’s revised industry outlook for 2012.
Although the updated projection still expects profits to plummet to $3 billion with a net profit margin of just 0.5%, it highlighted significant changes in the aviation landscape since its last forecast in March.
“The $3 billion industry profit forecast has not changed but almost everything in the equation has,” director general and chief executive Tony Tyler said.
While he admitted fuel prices were now lower than previously anticipated, down to $100 a barrel from $120 earlier this year, he stressed decreases were based on the expectation of “economic weakness ahead”.
“A few months ago, an oil price crisis was the biggest risk – now all eyes are on Europe,” he said.
He emphasised the risk of a major downward shift in economic prospects as uncertainty continues to cloud how European governments will manage the situation if the crisis were to intensify.
Europe was expected to be hit the hardest, but the rest of the world was also set for reduced profitability in 2012, according to IATA. The US emerged as the exception with projected profits upgraded to $1.4 billion from $0.9 billion as a result of "tight capacity management".
Asia Pacific was downgraded by $0.3 billion, but was still on track to make the largest contribution to industry profit accounting for $2 billion.
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