News
IATA expects 7% yields decline this year
June 3rd 2016
Speaking at the International Air Transport Association (IATA) Annual General Meeting (AGM) in Dublin this week, outgoing IATA director-general and CEO, Tony Tyler, said he expects global passenger yields to drop 7% this year, while he predicts an 8% fall in cargo yields. Read More »
Nevertheless, IATA revised its 2016 financial outlook for global air transport industry profits upwards to $39.4 billion (from $36.3 billion forecast in December 2015). The industry body based its December forecast on an average oil price of $50, while the latest update factored $45 a barrel.
The impressive $39.4 billion profit is expected to be generated on revenues of $709 billion for an aggregate net profit margin of 5.6%.
“Lower oil prices are certainly helping—though tempered by hedging and exchange rates. In fact, we are probably nearing the peak of the positive stimulus from lower prices. Performance, however, is being bolstered by the hard work of airlines. Load factors are at record levels. New value streams are increasing ancillary revenues. And joint ventures and other forms of cooperation are improving efficiency and increasing consumer choice while fostering robust competition,” said Tyler.
In the Asia-Pacific, IATA predicts carriers will post a $7.8 billion 2016 profit, up from $7.2 billion in 2015, on a 9.1% capacity increase, outpacing 8.5% demand growth, putting greater pressure on yields. Tyler noted several challenges will continue to hamper Asia-Pacific carrier’s growth opportunities, including intense competition as the budget sector expands, restructuring in the Chinese economy and continuing infrastructure and cost difficulties in the Indian market.
