IATA upgrades 2013 airline outlook
The International Air Transport Association (IATA) has upgraded its 2013 global outlook for the airline industry to a US$12.7 billion (AU$13.14b) profit as fuel prices soften and industry-wide loads rise.
The figure, revealed at IATA’s annual general meeting in Cape Town, marks an increase from the US$10.6 billion (AU$10.97b) projected in March, and an improvement on the US$7.6 billion (AU$7.86b) generated in 2012.
Although lower fuel prices are expected to offset the “adverse effect” of weaker economic growth, IATA director general and chief executive Tony Tyler underlined the “very tough” nature of the business with margins still weak.
“The day-to-day challenges of keeping revenues ahead of costs remain monumental,” he said. “Many airlines are struggling. On average airlines will earn about US$4 (AU$4.14) for every passenger carried – less than the cost of a sandwich in most places.”
But Tyler stressed achieving even small profits with fuel at $108 per barrel and a weak economic outlook is a “major achievement”.
“Improved performance is what’s keeping airlines in the black. Airlines are putting more people in seats,” he said.
This year, industry load factor is expected to average more than 80% for the year – a new record. In addition, ancillaries are exceeding 5%.
“It is clear that airlines have found new ways to add value to the travel experience and to shore-up the bottom line,” Tyler said.
However, he stressed that more improvements are necessary if the industry is to achieve the 7% to 8% average cost of capital required by the industry.
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