IATA predicts
sector reporting $3 b in profit on $631-b revenues globally this year
Beijing, June
11:
The global
aviation industry is likely to report a profit of $3 billion this year on
revenues of $631 billion, the Director General of the International Air
Transport Association (IATA), Mr Tony Tyler, said on Monday.
Addressing the
68th IATA Annual General Meeting, Mr Tyler warned that the projections come
with some serious “downside risks” including high prices of oil.
Admitting that
oil prices had softened slightly, Mr Tyler said that it was still expected to
range around $110 a barrel on average.
“The industry's
profitability is balancing on a knife's edge. If the bottomline worsens by even
the equivalent of just 1 per cent of revenue, the $3-billion profit can very
quickly become a $3 billion loss,” he added.
The global
aviation body is also of the view that the biggest and most immediate risk
comes from the crisis in the Eurozone.
However, the
silver lining is that certain markets like those in America, which had not
performed that well earlier, are doing much better, although Europe still
remains a worry, officials said.
Partnership,
the key
IATA is of the
view that Governments, along with industry partnerships, play a key role in the
success of the airline industry globally. “To be successful, the players in the
value chain need to work as partners. If airlines are able to keep revenues
ahead of costs, every player in the chain benefits. This is not always well
understood,” the Director-General added.
In this
context, Mr Tyler mentioned how Governments often miss the mark with economic
regulations for the infrastructure supplied. “Many are monopolies that must be
regulated to ensure that the public interest is served. Yet, the regulator in
South Africa allowed a 161 per cent increase in airport charges and a 70 per
cent increase for air navigation fees over 2010-15. This was outdone by the
Indian regulator which allowed a 346 per cent increase in Delhi — making it
among the world's most expensive airports,” Mr Tyler pointed out.
Talking about
development of airports, the IATA chief said that some Governments, such as the
Chinese, see aviation as a workhorse but also gave examples of other “less
enlightened Governments,” including India, where the much needed new airport in
Mumbai will not open as scheduled in 2014.
“The industry's profitability is balancing on a knife's edge. If the
bottomline worsens by even the equivalent of just 1 per cent of revenue, the
$3-billion profit can very quickly become a $3 billion loss,” Mr Tyler said.
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