Japan impact deflates airline profits
Airlines in Asia-Pacific relieved some of the gloom surrounding the latest airline profit forecasts by the International Air Transport Association (IATA).
IATA said it expected airline industry profits to be just US$4bn in 2011 as rising fuel prices continue to dent profits of carriers.
In 2010, the industry made a profit of $18bn. In March, IATA had predicted profits of $8.6bn this year.
However, carriers in the Asia Pacific region are forecast to earn $2.1bn in 2011, the highest out of all the regions although still sharply lower than the $10bn profit that the region’s carriers made last year.
According to IATA, demand for air travel in the region, driven by robust demand in China and India, is expected to increase by 6.4 percent in 2011.
But it warned that lower demand for air travel from Japan may have a big effect on growth.
The March 11 earthquake and tsunami in Japan triggered a drop of 31 percent in demand for domestic travel in Japan in April, compared with the previous year, according to IATA.
Internationally, Japan saw air traffic fall by 20 percent in April.
“Japan represents 10 percent of the total industry revenues – that will impact strongly,” said Giovanni Bisignani, the head of IATA.
Ian Jarrett
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