Air travel up in May but thin profits expected

Air travel up in May but thin profits expected

Air travel continued to expand at a healthy rate in May with growth led by emerging markets, latest Iata figures show.

Overall passenger demand was up by 5.6% year on year, while capacity climbed 5.2% to push the load factor up 0.3% to 78.1%.

The underlying growth trend has picked up in Europe, suggesting that improving consumer and business confidence could be supporting stronger growth in demand.

Iata director general and chief executive Tony Tyler said: “Global economic performance remains a concern; however, demand for air travel continues to expand.

“The primary driver is growing demand for connectivity to emerging markets. The business environment has also improved compared to mid-2012 with some indications of easing weakness in the eurozone.

“It’s still a tough environment, but there are some reasons for optimism in the second half of the year.”

The world’s airlines are expected to make $12.7 billion profits this year. On $711 billion in revenues, that is a 1.8% net profit margin, or around $4 profit for every passenger.

Tyler said: “The average profit per passenger is just enough to buy a sandwich in most parts of the world.

“Aviation will have to do much better than that in order to attract the $4-5 trillion in capital investment that will be needed over the next 20 years to meet the demands for aviation-enabled connectivity.”


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