Geneva: Lower oil prices and stronger global GDP (gross domestic product) will see world airlines yielding a collective net profit of $25 billion (Dh91.7 billion) in 2015, up from the $19.9 billion projected for this year, the International Air Transport Association (IATA) said on Wednesday as it revealed its outlook for improved industry profitability for the air transport industry.
Middle East airlines, meanwhile, will produce a net profit of $1.6 billion next year, up from this year’s forecast of $1.1 billion. The aviation watchdog, however, revised downwards its forecast for the region’s airlines, to $1.1 billion for this year, compared to the $1.6 billion prediction in June.
“Drop in oil prices is a relief for airlines … it has to be good for airlines,” said Tony Tyler, IATA’s Director General and Chief Executive Officer. “The industry outlook is improving. The global economy continues to recover and the fall in oil prices should strengthen the upturn next year.”
Meanwhile, weakening of oil prices is expected to continue into 2015 with the full-year average Brent price expected to be $85 a barrel, according to Brian Pearce, IATA’s Chief Economist. “The fuel, however, will continue to account for around 30 per cent of airlines’ total fuel bill, on an average,” he said.
“Yet, it is a huge incentive for airlines to operate more fuel-efficient aircraft,” Tyler added.
Passenger traffic, too, is expected to grow by 7 per cent in 2015, well above the 5.5 per cent growth trend of the past two decades, IATA said.
“Stronger industry performance is good news for all. It’s a highly competitive industry and consumers — travellers as well as shippers — will see lower costs in 2015 as the impact of lower oil prices kick in,” Tyler said.
Oil prices plumbed fresh five-year lows on Tuesday — Brent crude fell as far as $65.29 a barrel, to its lowest since September 2009, before rebounding later in the day. Brent has fallen some 43 per cent in the last six months on supply gut concerns. And global GDP is expected to grow by 3.2 per cent in 2015, up from 2.6 per cent this year.
