AAPA expects airline profits to fall
The Association of Asia Pacific Airlines (AAPA) expects a profitable year ahead for the region’s airlines but still rising oil prices will weigh heavily on their ability to maintain profit growth.
AAPA director general Andrew Herdman expects lower profits overall as airlines will struggle to pass on the extra costs in the form of higher fares.
While air travel demand remains high, fare increases will be limited due to intense market competition.
"That rise in oil prices has continued relentlessly this year and that’s been biting airlines depending on the extent to which they are hedged," Herdman said.
"The question has been how much of the fuel cost can be passed on in the average fares and that varies dramatically by market. But in general there is a lag and margins have been under pressure."
"The pressure in Asia based on the results we’ve seen so far this year are that it’s been very difficult to pass on the full cost impact," Herdman added as the AAPA annual Assembly of Presidents wrapped up in Jeju, South Korea.
The AAPA event also passed a number of resolutions to enhance cooperation on aviation safety, infrastructure, and a call to governments and law enforcement agencies to expand resources to combat illegal wildlife trafficking.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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