Air fares set to fall next year
Air fares are expected to drop by 5% next year thanks to lower oil prices and a stronger economy.
Latest figures from the International Air Transport Association says global airline profits is expected to reach $19.9 billion this year, up from the $18 billion projected in June.
This figure is set to rise to $25 billion in 2015.
"The industry outlook is improving, said Tony Tyler, IATA’s director general and CEO.
"The global economy continues to recover and the fall in oil prices should strengthen the upturn next year."
But he said although airlines will make $25 billion in 2015, this is still just a 3.2% net profit margin.
"The industry story is largely positive, but there are a number of risks in today’s global environment—political unrest, conflicts, and some weak regional economies- among them. And a 3.2% net profit margin does not leave much room for a deterioration in the external environment before profits are hit."
But although the global figure is rising, IATA said there are stark differences in profitability among the regions.
The strongest financial performance by far is being delivered by airlines in North America, but European airlines continue to struggle.
IATA said European airline are hampered by ‘high regulatory costs, infrastructure inefficiency and onerous taxation’.
Africa is the weakest region, as in the past two years, and profits are barely positive.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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