Concerns over an expanding trade war and higher oil prices have led global airlines to slash a key industry profit forecast by 21 per cent, Reuters has reported.
IATA, which represents about 290 carriers or more than 80 per cent of global air traffic, said the industry is expected to post a $28bn profit in 2019, down from a December forecast of $35.5bn “Airlines will still turn a profit this year, but there is no easy money to be made,” IATA Director General Alexandre de Juniac said at the group’s annual meeting in Seoul. “Creeping protectionist or isolationist political agendas are on the rise,” he added.
Airlines had reported $30bn in annual profits in 2018, but conditions in the air cargo market – an extra source of revenue for carriers – have weakened substantially. “You see that international trade is now at a zero growth rate, so there is an immediate impact on our cargo business,” de Juniac said. Passenger capacity growth, which reached 6.9 per cent in 2019, is forecast to slow to 4.7 per cent this year, with average fares flat following a 2.1 per cent decline in 2018.