Global aviation expects earnings to ease
The global aviation industry has enjoyed a record year thanks to low oil prices, but earnings growth may be tempered in the year ahead.
Further profit improvement is anticipated in the first three months of 2016, but fewer industry chiefs now expect the year ahead will see growth as strong as in 2015, the International Air Transport Association’s latest quarterly survey has found.
Fare and pricing pressure, diminished expectations of cost reductions and modest global economic growth are expected to put downward pressure on yields, the IATA says.
“Expectations of further gains in profitability over the year ahead have eased markedly in recent surveys, as yields have come under strong downward pressure and expectations of future cost reductions have diminished,” the IATA said on Wednesday.
Long-run expectations for growth remained positive for both passenger and cargo businesses, although expectations of the latter had moderated since the start of 2015 as structural headwinds, such as ongoing global trade growth weakness, had risen to the fore, the IATA said.
Just under 42 per cent of survey respondents expected profitability to increase over the next 12 months, while the number expecting profitability to remain unchanged increased to one-third.
Qantas, Australia’s biggest airline, earlier in April said lower demand – with consumers worried about the economy – had prompted it to abandon plans to increase seat capacity in April, May and June.
Rival Virgin Group is expected to release its third-quarter update in May.
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