The International Air Transport Association (IATA), during its Annual General Meeting in Singapore, said that the profit earning potential of Middle Eastern carriers for 2011 will be down to $100 million (Dh370 million). The decrease is attributed to high oil prices, natural disasters and political unrest. The global aviation body has slashed the revenues to $4 billion, which is a 54% fall compared to the forecast it made in March.
Airline sector recorded a net profit of $18 billion in the year 2010. Emirates Group reported a profit of $1.6 billion last month. The outgoing director general of IATA, Giovanni Bisignani, said that one can expect such falls in future also. The high volatile fuel prices have a major impact on the future prospects of the industry. A rise in price of oil meant 30 percent increase in industry costs which was only 13 percent a decade ago. For each dollar increase in the price, the airlines’ costs increase by $1.6 billion. It is estimated that the fuel bill will rise by $10 billion to $176 billion.
IATA has revised the growth rates for both cargo and passenger markets. While the passenger demand is likely to grow by 4.4 percent, the cargo demand is expected to grow by 5.5 percent. However, the premium passenger growth has come down in 2010. Overall it is estimated that the combined passenger and cargo capacity for the airline industry will grow by 5.8 percent.
source: Gulf News