Asian airlines “lagging” in terms of profits
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Airlines based in the Asia Pacific region lagging those in Europe and the US in terms of profits, despite the sharp rise in traffic being seen in the region, IATA has said.
Addressing a media roundtable event in Hong Kong, the association’s director-general & CEO, Tony Tyler, said that while lower oil prices and rising passenger demand are helping the region’s carriers, they are still only making approximately US$5 per passenger – half the global average.
“On a per passenger basis, airlines are making less than US$10 for each passenger carried. So airline profits are still fragile in the face of any new taxes that our partners in government might be planning,” said Tyler.
“Furthermore, the profitability is not evenly distributed. The majority of the industry’s profits are being generated in North America – US$19.2 billion. On a per passenger basis they will retain over US$21. Asia Pacific airlines are expected to generate a US$6.6 billion profit which equates to just over US$5 per passenger.”
But Tyler added that the trends being experienced in Asia Pacific will drive the growth of the industry in the years and decades to come.
“You might be surprised that Asia, on aggregate, is lagging in profitability. We have long been saying that the industry’s centre of gravity is shifting eastward, and that is true. Carriers in this region are growing fast and making travel accessible to more and more people,” he said. “This year we expect 3.8 billion passengers – about 34% of them will be in the Asia Pacific region. That will grow to 42% by 2034. China, which is already an aviation powerhouse, will be even more pivotal with the journeys of one in five travellers being either to, from, or within its geography.
“At a global level we expect to be at 7.0 billion passengers by 2034. That’s 3.2 billion more travellers than we expect this year. Of these, nearly half (1.8 billion) will be in Asia Pacific — the vast majority on routes linked to China,” he added.
IATA also noted that it has “not seen any indication” that the problems in the Chinese economy are dampening demand for air travel. “The refocusing of the Chinese economy on consumption is having a positive effect on demand for travel,” Tyler stated.
“Running an airline remains a very challenging job! But ensuring a healthy air transport sector — and the economic and social benefits that it delivers — is much wider than an airline challenge. Governments and infrastructure providers will also need to contribute with efforts to keep costs low, provide sufficient capacity and keep efficiency high,” he concluded.
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