Airlines making just £3.60 profit per passenger

THE GLOBAL airline industry earns on average less than $6 (£3.60) from each passenger, according to research from the International Air Transport Association (Iata).

While the trade body still expects there to be significant overall growth in 2014 for the global airline industry compared to 2013, Iata slashed its profit forecast for the sector for the year, highlighting concerns about China’s economic performance and slow growth in world trade.

The organisation estimates global industry profits of $18bn for the year, $700m lower that its March forecast of $18.7bn, with airlines expected to earn an average net margin of only 2.4 per cent, on estimated earnings per passenger of $5.42.

For Europe the organisation estimates net profits of $2.8bn and a margin of just 1.3 per cent, with earnings from each passenger at only $3.23, with low yields and high regulatory costs significant factors affecting European airlines.

Costly regulation and a heavy tax burden, as well as rising infrastructure costs and inefficiencies in air traffic management, are seen as being a significant burden on the airline industry according to Iata director general Tony Tyler.

While fuel costs have been relatively stable recently, they have remained high for the last three years, with fuel accounting for around 30 per cent of operating costs for the airline industry.

The research says that some $746bn is expected to be spent on air transport in 2014, accounting for one per cent of world GDP in total.

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