MUSCAT: Airlines in the Middle East region are expected to post a $400 million profit (down from $1.1 billion in 2016) which is equal to $1.78 per passenger. Passenger demand is expected to grow by 7 per cent, slightly ahead expected capacity growth of 6.9 per cent, according to the International Air Transport Association (IATA).
Trading conditions for the Middle Eastern carriers have sharply declined over the last six months. Profitability and load factors are down significantly, as traffic and some business models have come under pressure. “There is growing evidence that the ban on large electronic devices in the cabin and the uncertainty created around possible US travel bans is taking a toll on some key routes. Meanwhile the region is struggling with increased infrastructure taxes/charges and air traffic congestion,” said IATA in a statement.
The International Air Transport Association (IATA) revised its 2017 industry profitability outlook upwards. Airlines are expected to report a $31.4 billion profit (up from the previously forecast $29.8 billion) on revenues of $743 billion (up from the previously forecast $736 billion).
“This will be another solid year of performance for the airline industry. Demand for both the cargo and passenger business is stronger than expected. While revenues are increasing, earnings are being squeezed by rising fuel, labor and maintenance expenses. Airlines are still well in the black and delivering earnings above their cost of capital. But, compared to last year, there is a dip in profitability,” said Alexandre de Juniac, IATA’s Director General and CEO.
In 2017 airlines are expected to retain a net profit of $7.69 per passenger. That is down from $9.13 in 2016 and $10.08 in 2015. The average net profit margin stands at 4.2 per cent (down from 4.9 per cent in 2016).
