Airlines are expected to make a record breaking profit of $39.4 billion in 2016, according to the latest financial forecast from IATA.
This year airlines are expected to generate revenues of $709 billion with a net profit margin of 5.6 per cent, with 2016 predicted to be the fifth consecutive year of profit growth.
IATA said more than half of the industry profits will be generated in North America ($22.9 billion) while African carriers are forecast to generate an overall loss (-$0.5 billion).
The large profits are being generated through low oil prices sparking warnings airlines are failing to pass on savings to passengers.
“Lower oil prices are certainly helping—though tempered by hedging and exchange rates. In fact, we are probably nearing the peak of the positive stimulus from lower prices,” said IATA CEO Tony Tyler.
“Performance, however, is being bolstered by the hard work of airlines. Load factors are at record levels.
“New value streams are increasing ancillary revenues. And joint ventures and other forms of cooperation are improving efficiency and increasing consumer choice while fostering robust competition.
“The result: consumers are getting a great deal and investors are finally beginning to see the rewards they deserve,” he said.
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