Loading

CAPA World Airline Profit Outlook 2016: margins at a new high of 8.2%. Fertile ground for new entry

The airline industry was more profitable in 2015 than it has been for almost five decades, according to the Jan-2016 update to CAPA's global operating margin model. And it doesn't stop there. CAPA’s base case scenario projects world airline operating margins rising further above previous historic peak levels in 2016. These new levels of profitability are thanks to the low oil price environment, now expected to continue this year, coupled with strong demand growth in spite of global economic growth rates that are far from exceptional. The macroeconomic and geopolitical backdrops provide the main risks to this forecast.

CAPA also flags the potential emergence of ideal conditions for new entry. As oil prices remain low, fleet replacement rates are reducing, just as new aircraft delivery rates step up in 2016/2017, implying downward pressure on aircraft prices. Money is still cheap and so conditions begin to imitate those of a dozen years ago – the halcyon period for a spurt in LCC growth.

This CAPA Premium Analysis article is 3,293 words.

To access CAPA Premium Analysis you need a CAPA Membership

Your window into the latest insights

CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.

Big picture strategic view

Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.

Global intelligence

The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.

Customise your Alerts

CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.

I'm very impressed by the factual and detailed analysis CAPA is always doing.

- CEO, Airline Member
To learn more, contact us:
Phone: +61 2 9241 3200 | Email: membership@centreforaviation.com