IATA sees AsPac airlines posting 16% profit growth

MANILA, Philippines - Earnings of airlines in the Asia Pacific region including the Philippines is expected to grow 16 percent next year amid a slower growth this year on the back of rising aviation fuel prices due to the crisis in Syria as well as disappointing economic growth in emerging markets.

The International Air Transport Association (IATA) sees Asia Pacific airlines recording profits of  $3.6 billion in 2014 or $500 million higher than the projected $3.1 billion this year.

“Asia-Pacific is expected to see a modest improvement in profitability to $3.6 billion, largely on the back of improved cargo performance, the growing Chinese domestic market and the benefits of restructuring in Japan,” IATA said.

In the Philippines, only budget airline Cebu Air Inc. (Cebu Pacific) is earning money while the rest led by national flag carrier Philippine Airlines Inc. (PAL) are on the red.

The organization sees the global airline industry posting a 40-percent growth in earnings to $16.4 billion next year from $11.7 billion this year on the back of a five percent revenue growth to $743 billion from $708 billion due to rising business and consumer confidence levels as well as easing oil prices.

IATA expects a slightly robust passenger growth of 5.8 percent and a significant improvement in cargo growth to 3.7 percent.

North American carriers see a net profit of $6.3 billion followed by European airlines with $3.1 billion, Middle East carriers with $2.1 billion, Latin American airlines with $1.1 billion, and African carriers with $100 million.

Tony Tyler, IATA’s director general and CEO, said airlines are demonstrating that they could be profitable in adverse business conditions.

 â€œEfficiencies are being generated through myriad actions — consolidation, joint ventures, operational improvements, new market development, product innovations and much more. When market forces drive action, we get results that both strengthen the industry and benefit the consumer,” Tyler said.

He pointed out that the balance between profit and loss remains delicate despite the forecast improvement for 2014.

 â€œA $16.4-billion profit for transporting some 3.3 billion passengers means that airlines will retain an average of about $5 per passenger. That very simple calculation demonstrates that even a small change in the operating environment — a new tax or other cost increase for example — could change the outlook quite significantly,” he explained.