Airlines are “walking on a tightrope” facing rising costs and taxes
Rising costs such as fuel prices and, in some markets, increasing taxes on fares will cut airline profits by half in 2011, IATA predicts, putting at risk the sector’s demand-led recovery. Costs will slash the net profit margin from 29% in 2010 to just 1.4% this year.
“We are constantly walking on a tightrope with very thin margins, and there is no buffer,” IATA’s chief executive Giovanni Bisignani said. “This industry is very, very fragile.”
The association’s latest global forecast points to wide variations in the performance of carriers by region, with a net profit margin of 4.6% benefitting airlines in the Asia-Pacific region. Airlines in Europe, by contrast, are the least profitable of the world’s major regions.
[pictured: Finnair Boeing MD-11, courtesy oneworld]