The International Air Transport Association (IATA) revealed economic deterioration and a lack of confidence has resulted in a decrease in demand for global travel.
The diminishing trend “does not bode well for industry profitability,” according to IATA director general Tony Tyler.
“The airline industry is fragile. Relief in oil prices provides some good news. Unfortunately, the softness in oil markets comes on the back of fears of deterioration in the European economy,” he said.
“Business and consumer confidence are falling. And we are seeing the first signs of that in slowing demand and softer load factors.”
According to Mr Tyler, airlines are expected to return a $3 billion profit in 2012 on $631 billion in revenues.
“That’s a razor-thin 0.5% margin.”
Although passenger demand increased year-over-year, growth has been non-existent when compared to the previous month of April 2012.
International passenger demand for May 2012 increased 5.6 percent compared to the same month in 2011, yet was significantly less than the growth recorded in April 2012.
The Middle East was the only region to be unaffected by slowing growth patterns compared to the previous month’s results.
The domestic and air freight markets also recorded a reduction in growth rates compared to the previous month’s year-on-year statistics.
Mr Tyler stressed the need to properly regulate growth and the determining factors which have a direct impact on these figures.
“Whether bringing people together or moving cargo around the globe, aviation is vital to modern life,” he added.
“The G-20 leaders recognized the critical role of aviation which is the backbone of travel and tourism that is a vehicle for job creation, economic growth and development.
“Now we need governments to move from recognition to action with tax policies that don’t kill growth, regulation that enables growth and infrastructure to accommodate growth.”
Wednesday, 4 July 2012
Airline profitability suffering: IATA
Source = e-Travel Blackboard: P.T