GENEVA - The global airline industry expects its profits to jump to a record high next year, helped by falling jet fuel prices, rising travel demand and cost-cutting.
The International Air Transport
Association said Thursday it forecasts a profit of $19.7 billion -- well above
the $12.9 billion expected this year and the $7.4 billion made in 2012.
But the Geneva-based group, which
represents 240 airlines, or 84 percent of total air traffic, noted margins are
dropping. Next year's profit would come from projected revenues of $743
billion. By contrast, 2010's $19.2 billion profit was made on revenues of just
Tony Tyler, director-general and CEO
of IATA, said that the profit would amount to a little less than $6 per
"To put that into perspective,
the McDonald's down the road here in Geneva will make about the same amount of
profit by selling four Happy Meals at a cost in Geneva of $30," Tyler told
That kind of margin, at 20 percent, is
well out of reach for airlines, he said.
"It begs the question of whether
$6 per passenger is a reasonable reward for airlines if you consider the
technology, skills and capital that is invested," he said.
Passenger traffic has been expanding
by about 5-6 percent and jet fuel prices remain high, but below their 2012
peak, Tyler said. The $12.9 billion net profit the industry expects for 2013,
based on $708 billion in revenue, is itself a significant improvement on the
group's earlier forecasts.
He attributed that to "a slight
fall in the high price of oil" and the efficiencies of mergers and joint
ventures, along with more success at cutting costs. Mare airlines, for example,
are charging passengers separately for food, baggage and other items.
North American airlines are expected
to make the biggest profit next year -- $8.3 billion, up from $5.8 billion this
year - but see only a modest increase in demand for flight travel.
Carriers in Europe, where the economy
has fared worse than other developed markets, are expected to have smaller
profits -- $3.2 billion in 2014 from $1.7 billion this year. But they are due to
enjoy a sharper recovery in passenger traffic as the recession ends in some
The highest growth in demand is
forecast in emerging markets in Asia, the Pacific region, the Middle East,
Latin America and Africa.
Asian airlines should see profits hit
$4.1 billion next year, ending a three-year drop in earnings, while the Middle
Eastern ones should see steady growth - to $2.4 billion from $1.6 billion.