Financial News

  • 2 June 2014, 17:38

Airlines 'Make Less Than 4 Per Passenger'

The global airline industry is expected to make less than 4 profit for each passenger carried this year, its trade body has said.

The statistic was highlighted by the head of trade body International Air and Transport Association (IATA), at its annual conference.

Although it expects airline companies to record combined net profits of $18bn (10.8bn) this year, it said the average margin is only fractional.

It said total revenues were forecast to almost reach three-quarters of a billion dollars, but massive overheads will eat into returns.

IATA director general Tony Tayler, speaking in Qatari capital Doha, said: "It sounds impressive.

"But the brutal economic reality is on revenues of $746bn (445bn) we will earn an average net margin of just 2.4%."

He added that this amounted to less than $6 (3.50) per passenger.

IATA said in March that its members, 240 carriers representing 84% of global air traffic, had revised down their profit forecast for 2014 to $18.7bn (11.1bn) from $19.7bn (11.75bn).

Increasing infrastructure expenditure, inefficiencies in control systems, taxation and regulation were cited as causes.

Slowdown in China's growth was also blamed on the reduced total revenue.

Mr Tyler also said the industry was looking at technological upgrades in the wake of the mystery surrounding the disappearance of Malaysia Airlines flight MH370.

He said the group will prepare a draft of new recommendations in September to improve global tracking capabilities.

Mr Tyler told the conference this year was the centenary of commercial air travel, during which 3.3 billion passengers have travelled and 52 million tonnes of cargo transported.

IATA said global aviation includes 50,000 destinations linked by around 100,000 daily flights, while the industry generates more than 58 million job opportunities worldwide.

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