IATA forecast airlines in 2015 to post profit of USD 33 bn

Revising upwards its forecast for 2015, global airlines body IATA today said it expects airlines to post a net profit of USD 33 billion as against USD 29.3 billion estimated earlier in June this year on account of low fuel prices.
For 2016, International Air Transport Association (IATA) sees an average net profit margin of 5.1 per cent being generated with total net profits of USD 36.3 billion, a release said.
According to IATA, passenger capacity growth in Asia Pacific is expected to accelerate from six per cent in 2015 to 8.4 per cent in 2016 as new aircraft are delivered largely to accommodate growth in the major emerging markets of India, Indonesia and China.

The region is, however, in the front line for the impact of continued weakness in cargo revenues, it said.
In both 2015 and 2016 the industry's return on capital (8.3 per cent and 8.6 per cent respectively) is expected to exceed the industry's cost of capital (estimated to be just under 7 per cent in 2015 and 2016 because of low bond yields, IATA said,
"The airline industry is delivering solid financial and operational performance. Passengers are benefiting from greater value than ever-with competitive airfares and product investments. Environmental performance is improving. More people and businesses are being connected to more places than ever," IATA Director General and chief executive officer Tony Tyler said.

"Employment levels are rising. And finally our shareholders are beginning to enjoy normal returns on their investments," he said.

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Touching upon the hybrid till approach for deciding airport charges, Tyler said putting it into law and regulation through the civil aviation policy is a wrong approach.
The Airports Economic Regulatory Authority of India (AERA) should determine what sort of till should be used, he said.
Under the hybrid till model, the airport operator adds a part of the non-aeronautical (duty-free shops, hotel, restaurant, among others) revenue and the total revenue from the aeronautical (landing, parking and ground handling charges) side to compile total earnings.

Besides, under the model, the aeronautical rates are decided on the basis of total earnings.
As against this, under the single-till approach, an operator's total revenues from non-aeronautical operations like retail shops, real estate development and car parking are taken into consideration for determining the user charges for passengers and airlines.
"The AERA and the Ministry of Finance itself both support a single till approach which is certainly the one that IATA believes is the correct way to move forward in this area," Tyler said.
According to him, airport regulation is a very complicated issue which it involves a lot of different factors like the rate of return, the sort of till you want to use, the amount of investment required.

"There are a lot of different elements in there and its wrong just to take one of them and regulate it must be a hybrid till," he noted.
Stressing the need for having an aviation policy that would help the country realise its potential, Tyler said Indian aviation would support 19 million jobs and USD 170 billion in GDP.
"We see the potential for 350 million passengers by 2034, we see an enormous potential for the airlines and of course for aviation to play a vital role that it can do in connecting the Indian economy within India and also to the world.

"But to do that, the government needs to move forward with the right policy approaches and those policy approaches are the ones that embrace the idea of partnership with the industry and deep consultation with industry because we all want the same in the end. If the government will consult the industry, talk to the experts, we can do this together," Tyler said.