IATA director general Tony Tyler has come out to explain the factors behind the aviation association’s revised projection for the industry this year, attributing the downward adjustment to high oil prices, a weak global economy, poor cargo performance and consolidation.
Previously set at US$12.7 billion in June, IATA is now anticipating US$11.7 billion in profit for this year (TTG Asia e-Daily, September 24, 2013).
During a media roundtable held yesterday in Singapore, Tyler said: “Running an airline is tough. And it would not take much in terms of a new tax, increased charge or change in the economic environment to significantly impact the bottom line.
“We expect some (oil) price relief in 2014…with a slight decline to US$105 per barrel from US$109 this year. But let’s remember that in 2004, oil was US$38.20 per barrel.”
According to Tyler, airlines will make a loss as long as global GDP growth is under two per cent. However, he noted: “This year we will see a decoupling of that relationship with airlines delivering a small profit with gross domestic product growth expected to be exactly two per cent.”
Tyler highlighted that Asia-Pacific airlines – while stronger than their European counterparts – “are not having an easy time”. He forecasted Asia-Pacific would earn US$3.6 billion in 2014 due to the continued strength of the domestic Chinese market and benefits of restructuring in Japan, but cautioned that India remained plagued by “high operating costs and infrastructure issues”.
Earlier last week, IATA also welcomed the historic agreement by member states of the ICAO to establish a global framework to curb the industry’s carbon emissions (TTG Asia e-Daily, October 7, 2013).
However, the European Commission has since published new proposals to extend the EU Emissions Trading Scheme to all flights within EU airspace. This would apply from January 1, 2014 until the planned global market-based measure kicks in.
Andrew Herdman, director general of the Association of Asia Pacific Airlines, said in response: “The inclusion of international airlines without the consent of their respective governments is likely to meet with strong opposition, particularly from major developing countries…We cannot afford to jeopardise the good progress that has been made in reaching a consensus on the development of a global market-based measure to be implemented by 2020. That’s where our collective efforts should be focused.”
