Airline industry enjoys year of robust growth

In Africa, Airlines, IATA, Middle East, profitability by Simon Crompton-ReidLeave a Comment

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THE airline industry has shown “robust” growth in the past year due mainly to improved efficiencies that airlines had instituted, growth in overall passenger trips and growth in the emerging-market economies such as Africa and the Middle East, says International Air Transport Association (Iata) chief economist Brian Peace.

“Although the numbers look big, it is a big industry, the returns are small,” he said.

Mr Peace was speaking at a briefing on Monday on the first day of Iata's annual general meeting in Cape Town.

The key industry measure of profitability is the yield, or revenue generated per departing passenger. According to Iata's examination of last year's airline results, for each departing passenger this was $228.26. This included $181.91 for the air fare, $12.09 for ancillary services, and $34.26 for cargo.

Costs had increased to $225.72 for every departing passenger, leaving a net profit of $2.54. “This yield per passenger is forecast to increase to around $4,” he said.

Iata has upgraded its forecast for airline net post-tax profits from $10.6bn to $12.7bn, but said this was still not as good as in 2010.

The industry has resolved to adopt a carbon-neutral generation strategy by 2020 and says it is the first industry to take such a step.

However, the resolution at the annual general meeting excludes the Chinese and Indian delegations as they refused to endorse it because they believe carbon emissions are a matter for sovereign governments.

The resolution said Iata members had recommended to governments the adoption of a single market-based measure (MBM) for aviation, and on how it may be applied to individual carriers.

“Now the ball is in the court of governments,” the statement said and suggested the measures would be taken to the International Civil Aviation Organisation (Icao) assembly to examine later this year.Icao sets policy in the aviation sector on behalf of governments.

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The Aviation Outlook Africa conference will be happening on the 25-26 June 2013. It will be bringing together airlines, airports and all commercial aviation stakeholders together to discuss insights uncovered by this report and other important issues affecting African Aviation To get more information email Tendi at Tendekayi.Mutandagayi@terrapinn.com

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