Middle Eastern airlines are expected to post a $2.2 billion profit in 2014, the International Air Transport Association (IATA) said on Wednesday, down by $200 million from its previous forecast.
IATA said revenues from high oil prices are benefiting the region’s markets and carriers are continuing to win market share in long-haul connections through the region’s hubs.
In a statement, IATA said cargo, in particular is experiencing strong growth as a result, partly, of tapping into newly emerging trade lanes such as those between Africa and Asia.
Globally, IATA announced that the airline industry remains on track to deliver a second consecutive year of improved profitability.Â
This is despite a slight downward revision to its industry outlook for 2014 to an industry profit of $18.7 billion from the previously forecast $19.7 billion.
It said the main driver of the downward revision is higher oil prices which are now expected to average $108/barrel which is $3.5/barrel above previous projections. The $3 billion added cost on the industry’s fuel bill is expected to be largely offset by stronger demand, especially for cargo, which is being supported by a strengthening global economy.
Overall industry revenues are expected to rise to $745 billion, $2 billion greater than previously projected.
Tony Tyler, IATA’s director general and CEO, said: “In general, the outlook is positive. The cyclical economic upturn is supporting a strong demand environment. And that is compensating for the challenges of higher fuel costs related to geo-political instability. Overall industry returns, however, remain at an unsatisfactory level with a net profit margin of just 2.5 percent.”
IATA said the aviation industry retains on average $5.65 per passenger in net profit. This is improved from $2.05 in 2012 and $4.13 in 2013 but is below the $6.45 achieved in 2010.
IATA added that it expects passenger demand growth of 5.8 percent this year, slightly weaker than previously forecast but an improvement on the 5.3 percent growth for 2013.
Cargo demand is showing the biggest improvement. Instead of the previously projected 2.1 percent growth, it now appears that air cargo is headed for four percent growth in 2014.
