Airlines in the Asia-Pacific region are expected to corner the maximum profits this year, with the aviation industry's umbrella body IATA projecting a global profit of $8.9 billion in 2010.
Asia-Pacific carriers are expected to post a $5.2 billion profit this calendar year, compared with $3.5 billion in North America, $one billion in Latin America, $400 million in the Middle East and $100 million in Africa, the International Air Transport Association said in its latest industry outlook on Tuesday.
However, the growth witnessed this year was not likely to continue in 2011 due to several factors. While consumer spending was not expected to pick-up, joblessness was high and consumer confidence was falling in Europe and North America.
Revising its 2010 industry outlook, IATA projected a total global profit of $8.9 billion, up from the $2.5 billion forecast for this year made in June.
But it estimated that profitability would drop to $5.3 billion in 2011, as per its preliminary forecast. In its region-wise analysis, IATA projected $5.2 billion profits for Asia-Pacific airlines, saying it would be better than $3 billion recorded during the previous peak in 2007 and double the previously forecast $2.2 billion.
The strong improvement would be based on strong market growth and yield gains. Renewed buoyancy in air freight markets was also important for airlines in this region, where cargo can represent up to 40 per cent of revenues.
The 23.5 per cent improvement in high volume intra-Asia premium traffic, due to a surge in business travel, was another of the driving factors, the IATA said.
The latest projections said that while all regions except Africa showed improved prospects compared to the previous forecast, sharp differences remained among them.
"The industry recovery has been stronger and faster than anyone predicted. The $8.9 billion profit that we are projecting will start to recoup the nearly $50 billion lost over the previous decade. But a reality check is in order," said Giovanni Bisignani, IATA's Director General and CEO.
Releasing the outlook in Singapore, he said there were "lingering doubts about how long this cyclical upturn will last" and added that the profit margins the airline industry operate on were "so razor thin that even increasing profits 3.5 times only generates a 1.6 per cent margin".
Though 2010 augured well for the industry, governments were running out of cash for pump priming, while unemployment remained high and business confidence was weakening, he said, adding that as a result, "2011 is looking more austere. We see profitability falling to $5.3 billion with a margin of 0.9 per cent".
