IATA director general and CEO Tony Tyler noted (09-Jan-2013) 2013 is the 100th year of commercial aviation. He commented, "Over that century, through an ever-expanding network, air transport has transformed the way we live, work and play, providing jobs for some 57 million people and supporting $2.2 trillion in economic activity by connecting people and goods on 35,000 routes." IATA, however, warned continued connectivity growth is not guaranteed. Mr Tyler said, "The industry’s expected margin in 2013 of 1.3% is very weak. Furthermore current returns on investment are less than half the industry’s cost of capital, which continues to erode shareholder value. In the New Year, governments should resolve to bring down the barriers to connectivity growth. This can be done by addressing excessive taxation, high infrastructure costs, onerous regulation and improving the capacity and efficiency of airports and air navigation services. A strong air transport sector is in the self-interest of governments eager to support economic growth and development. Trade is the key to growth. For that connectivity is critical. And it is aviation that makes connectivity happen." [more – original PR]
Current returns on investment in aviation sector less than half the industry’s cost of capital: IATA
You may also be interested in the following articles...
CAPA global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn. CAPA’s global airline operating margin model indicates that the industry was more profitable in 2015 than it has been for almost five decades. Moreover, the model predicts that world airline operating margins will rise further above previous historic peak levels in 2016. These new levels of profitability are mainly thanks to the low oil price environment, coupled with strong demand growth in spite of global economic growth rates that are far from exceptional.
Much of the industry is also benefiting from a period of relative capacity discipline. New revenue sources may also be helping, although their role in airline profitability is still emerging.
The macroeconomic and geopolitical backdrops provide the main risks to this forecast. Beyond that, the biggest challenge for the industry will then be to try to sustain margin levels, rather than to allow a peak to be followed by a rapid downturn, as has always happened in the past. But downturns can play a positive role in industry development, possibly even stimulating consolidation.
Global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn