IATA hikes global airline profit forecast by 73%

The International Air Transport Association (IATA) has raised its 2011 forecast for global airline profits by 73%, citing stronger than expected demand in Europe and the Middle East
The transport agency said regional carriers will be among the biggest beneficiaries, with a forecast profit of US $800 million this year. This compares to a June forecast of $100 million, the IATA said in a statement.
“Airlines are going to make a little more money in 2011 than we thought. That is good news. Given the strong headwinds of high oil prices and economic uncertainty, remaining in the black is a great achievement,” said Tony Tyler, director general and CEO of IATA.
Passenger traffic in the Middle East rose 8.3 percent during the first seven months of the year compared to a capacity increase of 9 percent during the same period, the agency said.

The aviation group said it expected overall industry profits for 2011 to reach $6.9 billion, up from the $4 billion it predicted in June. Passenger traffic is expected to swell 5.9% compared to the previous year, up from 4.4% previously forecast.
European carriers gained the most amid stronger than anticipated traffic fuelled by a weak Euro, said IATA. Airlines across Europe are expected to deliver a profit of $1.4bn; a $400m increase on the group’s June forecast.
Still, IATA predicted global profits would decline next year as economic growth stalls in debt-laden western economies. “Airlines are competing in a very tough environment. And 2012 will be even more difficult,” said Tyler.
“The worst hit is expected to be Europe where the economic crisis means the industry is only expected to return a combined profit of $300m. A long slow struggle lies ahead.”
IATA warned the fourth quarter of 2011 and the first half of 2012 could be the weakest point for airline industry as business confidence declined. Overall passenger traffic next year is expected to increase 4.6%, slower than the 5.9% projected for 2011.
Only Asian Pacific airlines are expected to maintain profits close to 2011 levels, at $2.3 billion.
The aviation industry body also urged governments to consider the impact an increase in taxes would have on the airline industry.
Beginning in 2012, airlines landing within the EU will have their carbon dioxide emissions capped at 97 percent of their average 2004-06 levels and 95% in 2013.
Airlines will face fines of up to €100 for every tonne of carbon dioxide they emit above the limit, in a bid to cut pollution by five percent through 2020.
“Every plane that takes off is a catalyst for economic growth and prosperity. Governments must carefully evaluate the negative impact of the current high levels of taxation, absolutely resist increases or new taxes, and develop policies that support aviation’s growth,” said Tyler.
“Time and again aviation has shown its resilience. People need and want to travel. Now is the time to harness the economic possibilities that this presents.”