Airlines Mired in ‘Crisis' as Margins Shrink, IATA CEO Says

Airline profits forecast to total $28 billion in the three years through 2012 may be unsustainable as over-capacity and looming regulatory costs weigh on margins, the head of the IATA industry association said.
Airlines will generate net income equal to 0.8 percent of revenue next year, a margin that may shrink further if economic growth slows to less than 2.4 percent, Tony Tyler, chief executive officer of the International Air Transport Association since July 1, said in an interview in London.
“The natural condition of the airline industry is crisis,” Tyler said. “Occasionally, we've had short periods where the conditions are quite benign and everything goes quite well, and the danger is to believe that's normal -- and that's wrong.”
IATA's prediction for airline earnings to drop almost 30 percent to $4.9 billion in 2012 may prove too optimistic should the global economy slow further, said Tyler, who was CEO at Cathay Pacific Airways Ltd., Asia's No. 1 international carrier, for almost four years. The industry has lost money in seven of the past 10 years, even as sales doubled to almost $550 billion.
“We're assuming world economic growth will be just marginally down for next year,” Tyler said in the interview in London. “If we're wrong with that then all bets are off.”
04/10/11 Bloomberg/Business Week

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Categories: Foreign Oct 2011, Indian Aviation- In General Oct 2011