Global airlines body IATA on Wednesday projected lower profits for carriers in Asia-Pacific region, saying “turmoil” in foreign exchange markets in India had affected growth prospects for the aviation industry.
Maintaining that Asia-Pacific airlines were expected to post profits of $ 3.7 billion, the IATA in its financial forecast said the profits of airlines in this region in 2014 would be “$ 400 million less than the previous projection“.
Noting that there was an improvement in the global cargo market with airlines in Asia-Pacific having the largest share, it said, “However, the turmoil in foreign exchange markets earlier this year has adversely affected growth prospects for large economies in the region like India and Indonesia. Even China has slowed, albeit to a much lesser extent.”
The resulting adverse impact on passenger revenues more than offsets the improvement in cargo, said the study released at the Geneva headquarters of the International Air Transport Association (IATA) by its DG and CEO Tony Tyler.
The global aviation industry remained on track to deliver a second consecutive year of improved profitability, it said while revising downwards the profit projection from the previously forecast level of $ 19.7 billion to $ 18.7 billion.
Observing that the outlook generally remained positive for the industry, Tyler said “the cyclical economic upturn is supporting a strong demand environment. And that is compensating for the challenges of higher fuel costs related to geo-political instability.”
“Overall industry returns, however, remain at an unsatisfactory level with a net profit margin of just 2.5 per cent,” he said.
Mr. Tyler said the efficiencies of improved industry structure through “consolidation and joint ventures was providing more value to passengers and helping airlines to remain profitable even in difficult trading conditions.”
“But we still need governments to understand the link between aviation-friendly policies and broader economic benefits,” he said, pointing out that the industry’s “innate power to drive prosperity through connectivity is compromised by high taxes, insufficient infrastructure and onerous regulation”.
