‘Airlines to post record US$40b profits this year’

SINGAPORE: Global airlines are expected to post record profits of almost US$40 billion (RM164.4 billion) this year, the head of industry body IATA said yesterday, but he warned the sector faced threats from terrorism, a sharp rise in oil prices and protectionism.

Alexandre de Juniac, who took the reins at the International Air Transport Association (IATA) on Sept 1, also called on Southeast Asian nations to invest in infrastructure to cope with surging demand for air travel in the fast-growing region.

The former Air France-KLM chief executive told the group’s symposium in Singapore that collective net profit for the airline industry worldwide would hit US$39.4 billion, up from US$35.3 billion in 2015.

Speaking at his first international keynote address since taking over from Tony Tyler, de Juniac said carriers had benefited from a sharp fall in the price of oil – fuel costs are their biggest single expense – and a resilient travel market despite slow global economic growth.

IATA data shows that the fuel bill for airlines worldwide is expected to fall to US$127 billion this year, down 44% from 2014 when oil prices peaked at more than US$100 a barrel.

It will be the first time since 2004 that fuel will represent less than 20% of airlines’ total operating cost, IATA said.

Oil prices have tumbled for the past two years and hit a near 13-year low below US$30 a barrel in February owing to a global supply glut and overproduction.

The IATA chief also urged Southeast Asian governments to invest in airports and air traffic control systems to keep pace with the rapid increase in passenger numbers, driven by low-cost carriers. – AFP