Asia Pacific-based airlines reported record earnings in 2010, with a record USD9.5 billion net profit, a major turn-around from USD1.7 billion in net losses suffered in the previous year, according to Association of Asia Pacific Airlines figures. The strong results were underpinned by a resurgence of air travel and airfreight demand, and operating efficiencies including record high load factors.
“Buoyed by a firm recovery in premium business travel and a very strong rebound in demand for air freight, Asia Pacific carriers saw a welcome return to profitability in 2010, after two years of heavy losses. Asia Pacific airlines led the industry recovery, reporting combined net profits of USD9.5 billion, reflecting a 6.4% net margin, well above the industry average,” AAPA Director General, Andrew Herdman, said.
AAPA net profit margin: 2008 to 2010
Looking ahead, Mr Herdman noted that the medium and long-term prospects for Asia Pacific aviation remain “very positive” although he cautioned that the immediate outlook is “somewhat clouded” by the sharp increase in oil prices which could dampen the global economic recovery. The lingering effects of the Japanese earthquake are also still evident, although “there are some early signs of a recovery in demand for travel to and from Japan,” he said.
Combined revenues for Asia Pacific carriers reached USD147 billion, a strong 30% higher in 2009. Passenger revenues rose by 26% to USD106 billion and cargo revenues jumped 52% to USD22 billion.
Operating expenses increased by 18% to USD134 billion, mainly due to a 28% increase in fuel expenses to USD43 billion, the single largest cost item. The share of fuel expenditure as a percentage of total operating costs rose from 29% in 2009 to 32% in 2010 as oil prices rose 29% to an average of USD80 per barrel in 2010. Nonfuel expenditures increased by 13% to USD91 billion, with overall staff costs rising 12%.
As previously reported, international passenger traffic (RPKs) increased by 9.6% in 2010 and international cargo traffic (FTKs) increased by 24.0%.
IATA sees Asia Pacific as world’s most profitable region for airlines
IATA, in its latest Financial Forecast , noted that Asia Pacific airlines are expected to continue to be the most profitable in the world. IATA forecasts that net profits in Asia Pacific stood at USD7.6 billion in 2010, contributing 48% of global profitability, with profitability likely to decline to USD3.7 billion, or 43% of the global total, in 2011. Airlines in this region should continue to benefit from the strong economic growth in these regions.
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