Airlines will make from each passenger around the price of a pint of beer this year. Photo / 123rf.com
Airlines will make from each passenger around the price of a pint of beer this year. Photo / 123rf.com
Airlines will make an estimated $10.77 profit on every passenger they carry this year, down on the past two years and a thin buffer to economic shocks.
The International Air Transport Association revised up its 2017 industry profitability at its annual meeting in Mexico today. The association also criticised theUnited States and Britain for its ban on laptops in planes on some routes, saying New Zealand had mitigated any threat without following suit.
Airlines are expected to report a US$31.4 billion profit ($44b) up from the previously forecast US$29.8b on revenues of US$743b - up from the previously forecast US$736b.
The association's director-general and chief executive Alexandre de Juniac said this coming year would be a solid year of performance for the airline industry.
Demand for cargo and passenger business was stronger than expected.
While revenues were increasing, earnings were being squeezed by rising fuel, labour and maintenance expenses. Airlines are still well in the black and delivering earnings above their cost of capital.
''And the US$7.69 average profit per passenger sell does not provide a thick buffer to economic shocks," he said at the meeting being held in the resort of Cancun on the Caribbean coast.
Airlines were defining a new epoch in industry profitability. For a third year in a row returns would be above the cost of capital.
While overall industry performance is strong, major regional variations remain. About half the industry profits are being generated in North America (US$15.4b). Carriers in Europe and Asia-Pacific will each add a US$7.4b profit to the industry total.
Air New Zealand forecasts its full-year profit is likely to exceed $525m for the year - an improvement from the $475m to $525m it forecast in February.
Latin America and Middle East carriers are expected to earn US$800m and US$400m respectively. Airlines in Africa are expected to post a US$100m loss.
IATA director general and chief executive Alexandre de Juniac in Cancun. Photo/Supplied
On security de Juniac said IATA was still puzzled by the ban put on laptops by Britain and the United States from some airports in the Middle East and Africa.
Other members of the Five Eyes intelligence gathering group - New Zealand, Australia and Canada - were mitigating the threat without the ban, he said.
''Keeping our passengers and crew safe and secure is our top priority. While that creates a natural partnership with governments on security, the relationship is showing cracks," he said.
''We must trust the valid intelligence that underpinned the UK and US decisions. But the measures themselves test the confidence of the industry and the public - confidence that is critical for success of any security regime."
The bans were imposed without consultation and IATA was asking for a robust dialogue with governments to put airline expertise to good use.
''Quite frankly it's hard to understand the resistance. We could achieve better solutions by working together."
The association wanted an alternative to the ban, which in the short term would include more intense screening at the gate and skills training.
