North America Leads in Airline Profits

North America Leads in Airline Profits

Many of the challenges airlines face involve disputes with governments, and the lack of cost-efficient infrastructure to meet demand.

MIAMI BEACH, Fla.—As more airplanes fly with their seats filled and fuel prices drop, North America is leading the global airline industry in profits while much of the world still struggles, officials said Monday.

Airlines on the whole are projected to make $29.3 billion in collective profit on revenues of $727 billion in 2015, said Tony Tyler, director general of the International Air Transport Association (IATA), at the group's annual meeting in Miami Beach, Florida.

"For the first time in IATA's records, the industry as a whole is earning its cost of capital," he said.

The falling price of oil helped boost fortunes in the airline industry, but the rising value of the U.S. dollar canceled out much of those gains for some carriers, he said.

Instead, "the strongest driver of improved profitability is efficiency. This year we expect airlines to fill 80.2% of their seats, a record high," he told reporters. 

However, "it is a hard-earned four percent net profit margin," and airlines are making on average about $8.27 per passenger, he said.

Furthermore, industry performance is "far from uniform," with North America and Middle East airlines performing the best, he added.

Meanwhile, European, Asian-Pacific, African and Latin American carriers are performing below average for the industry, he said.

About half the industry's profits—some $15.7 billion—come from North American airlines.

Many of the challenges airlines face involve disputes with governments, and the lack of cost-efficient infrastructure to meet demand, he said.

"A look around the world shows many deficiencies," Tyler said. 

"It's difficult to see any real progress in a single European sky," he said, noting industry projections that Europe will see a 12% shortfall in airport capacity by 2035." 

He said Europe faces a "quadruple whammy of faltering economies, high taxes, onerous regulation, and failing efforts toward a Single European Sky."

Copyright Agence France-Presse, 2015

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