APAC airlines fly into profitability


SUSTAINED growth in passenger markets, lower fuel prices and operating efficiencies last year have aided Asia-Pacific airlines to return to profitability in 2015, the Association of Asia Pacific Airlines (AAPA) revealed.

According to AAPA’s preliminary figures, Asia-Pacific airlines recorded US$6.9 billion in combined net earnings last year, marking a major upswing from net losses of US$1.2 billion in 2014.

This was despite operating revenues falling 5.6 per cent from US$176.8 billion in 2014 to US$166.9 billion. Passenger revenue decreased 5.4 per cent to US$128.4 billion, due to a decline in yields despite the growth in traffic demand.

The revenue contraction was offset by a 12.6 per cent fall in combined operating expenses to US$153.0 billion, driven by a 31.4 per cent decline in fuel expenditure to US$41.2 billion.

Within the year, global jet fuel prices dropped significantly by 43.5 per cent to an average of US$64 per barrel. As a result, the share of fuel expenditure as a percentage of total operating costs declined 7.4 percentage points to 27 per cent.

“Asia-Pacific carriers saw a welcome return to profitability in 2015, after suffering aggregate losses in the previous year. The region’s carriers registered a significant operating margin of 8.3 per cent, compared with the one per cent margin achieved in 2014,” Andrew Herdman, AAPA director general, commented.

Looking ahead, he said: “Asian carriers are encouraged by the sustained growth in passenger demand, but continue to face a challenging operating environment characterised by intense competition, cost pressures and volatile currency markets.”

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