Airlines to post record US$40 billion profit
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. –