NEW DELHI: The global airline industry is expected to rake in a profit of $28 billion this year, much lower than the earlier forecast of $35.5 billion, IATA said on Sunday, as rising fuel prices and weakening world trade are adversely impacting the business environment.
“This year will be the tenth consecutive year in the black for the airline industry. But margins are being squeezed by rising costs right across the board—including labour, fuel, and infrastructure. Stiff competition among airlines keeps yields from rising.
The weakening of global trade is likely to continue as the US-China trade war intensifies. This primarily impacts the cargo business, but passenger traffic could also be impacted as tensions rise. Airlines will still turn a profit this year, but there is no easy money to be made,” said Alexandre de Juniac, IATA’s Director General and CEO.
It is also a decline on 2018 net post-tax profits which IATA estimates at $30 billion. The business environment for airlines has deteriorated with rising fuel prices and a substantial weakening of world trade. In 2019 overall costs are expected to grow by 7.4%, outpacing a 6.5% rise in revenues.
As a result, net margins are expected to be squeezed to 3.2% (from 3.7% in 2018). Profit per passenger will similarly decline to $6.12 (from $6.85 in 2018). “The good news is that airlines have broken the boom-and-bust cycle,” said de Juniac.
SpiceJet boss in IATA board of governors
Ajay Singh, Chairman and Managing Director of SpiceJet, has been appointed on the Board of Governors of the International Air Transport Association (IATA) for a three-year term effective from the conclusion of the 75th IATA AGM in Seoul, Republic of Korea. Singh will be the only Indian on the Board of Governors of IATA, the world’s biggest airline grouping. “It is a matter of great honour for me to be inducted into the Board of Governors,” said Ajay Singh.