Airline profits set to fall
IATA has lowered its profit forecast for the global airline industry for 2016 to $35.6 billion, almost $4 billion less than it forecast in June.
It said it expects the industry to make an even smaller profit of $29.8 billion in 2017.
IATA put the forecast reduction down to slower global GDP growth and rising costs.
Nevertheless, 2016 will be the highest ever profit generated by the airline industry.
"Airlines continue to deliver strong results," said IATA director-general Alexandre de Juniac.
"This year we expect a record net profit of $35.6 billion. Even though conditions in 2017 will be more difficult with rising oil prices, we see the industry earning $29.8 billion.
"That’s a very soft landing and safely in profitable territory. These three years are the best performance in the industry’s history — irrespective of the many uncertainties we face. Indeed, risks are abundant — political, economic and security among them. And controlling costs is still a constant battle in our hyper-competitive industry."
In 2016, oil prices averaged $44.6 a barrel and this is forecast to rise to $55 a barrel next year, pushing jet fuel prices from $52.1 a barrel to $64.9.
However, fuel is expected to account for only 18.7% of the industry’s costs in 2017, significantly below the peak of 33.2% in 2012-13.
IATA forecast the demand stimulated by lower oil prices will taper off next year, slowing traffic growth to 5.1%, down from 5.9% this year.
Airline capacity expansion is also expected to slow to 5.6%, down from 6.2% this year.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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