The International Air Transport Association (IATA) has announced that despite a slight downward revision to its industry outlook for 2014 to an industry profit of $18.7 billion from the previously forecast $19.7 billion, the airline industry remains on track to deliver a second consecutive year of improved profitability.
Speaking in Geneva, the director general of IATA, Mr. Tony Tyler said the main driver of the downward revision is higher oil prices which are now expected to average $108.0 per barrel which is $3.5oer barrel above previous projections.
He said the $3 billion added cost on the industry’s fuel bill is expected to be largely offset by stronger demand, especially for cargo, which is being supported by a strengthening global economy.
Overall, he said industry revenues are expected to rise to $745 billion ($2 billion greater than previously projected.
“In general, the outlook is positive. The cyclical economic upturn is supporting a strong demand environment. And that is compensating for the challenges of higher fuel costs related to geo-political instability. Overall industry returns, however, remain at an unsatisfactory level with a net profit margin of just 2.5%,” Tyler.
He further said the aviation industry retains on average $5.65 per passenger in net profit saying it improved from $2.05 in 2012 and $4.13 in 2013.
