FLYING could get cheaper in 2015 as airlines are expected to pass on the savings made on slumping oil prices in recent months to the consumer.
Average return airfares, excluding taxes and surcharges, are expected to fall 5.1 per cent next year from 2014 levels. Due to airlines’ forward fuel-buying practices, IATA notes that the impact of lower fuel prices will be realised with a time lag.
Airlines are expected to post a collective global net profit of US$25 billion in 2015, up from the projected US$19.9 billion in 2014, according to IATA. This is based on projections that oil prices will average at US$85 per barrel.
Lower oil prices and stronger worldwide GDP growth are the main drivers behind the improved profitability.
Tony Tyler, IATA’s director general and CEO, said: “The industry outlook is improving. The global economy continues to recover and the fall in oil prices should strengthen the upturn next year. While we see airlines making US$25 billion in 2015, it is important to remember that this is still just a 3.2 per cent net profit margin.
“The industry story is largely positive, but there are a number of risks in today’s global environment – political unrest, conflicts and some weak regional economies – among them. And a 3.2 per cent net profit margin does not leave much room for a deterioration in the external environment before profits are hit.”
All regions are expected to report improved net profitability in 2015 over 2014. Airlines in the Asia-Pacific region are expected to achieve a net profit of US$5 billion in 2015 (up from US$3.5 billion in 2014) with a 2.2 per cent net profit margin.
