Air­lines to post record US$40 bil­lion profit

The Myanmar Times - - International Business -

GLOBAL air­lines are ex­pected to post record prof­its of al­most US$40 bil­lion this year, the head of in­dus­try body IATA said, warn­ing that 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 on Septem­ber 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 told the group’s sym­po­sium in Sin­ga­pore last week that col­lec­tive net profit for the air­line in­dus­try world­wide would hit $39.4 bil­lion, up from $35.3 bil­lion in 2015.

Speak­ing at his first in­ter­na­tional key­note ad­dress since tak­ing over from Tony Tyler, Mr 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 $127 bil­lion this year, down 44 per­cent from 2014 when oil prices peaked at more than $100 a bar­rel. It will be the first time since 2004 that fuel will be less than 20pc of to­tal op­er­at­ing cost, IATA said.

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

But Mr de Ju­niac sounded a note of cau­tion for the fu­ture. “I am not here to pre­dict an end to the good times, but it would be un­re­al­is­tic to ex­pect them to last for­ever.”

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

While Asian eco­nomic growth is slow­ing, de­mand for travel has mush­roomed as a boom­ing mid­dle class look to travel fur­ther afield.

Lead­ing the Asian growth is China, which Boe­ing re­cently said will be­come the world’s first tril­lion-dol­lar avi­a­tion mar­ket within 20 years.

The world’s most pop­u­lous coun­try is ex­pected to add more than 6800 new air­craft to its com­mer­cial fleet worth $1.03 tril­lion by 2035, it said in its an­nual China Cur­rent Mar­ket Out­look. –

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