The boss of Iata has raised concerns over the increased tax burden imposed on airlines as the organisation outlined an improved profit forecast for the global airline industry.
The predicted profit for this year has gone up from $11.7 billion to $12.9 billion, with next year’s figure now expected to be $19.7 billion, up from an original forecast of $16.4 billion.
The upward revision reflects lower jet fuel prices over the forecast period as well as improvements to the industry’s structure and efficiency. Passenger markets continue to outperform the cargo business which remains stagnant both on volumes and revenues, Iata said.
Director general and chief executive Tony Tyler said: “Airlines have shown that they can rise to the challenges of a difficult trading environment. That’s good news for economies and consumers that depend on global connectivity.
“But I am increasingly concerned that governments have not fully appreciated the critical role that aviation plays in our connected world.
“Regulatory and tax burdens incrementally, but significantly, rise year on year. Some governments even appear to be backtracking on deregulation and are micro-managing in areas such as passenger rights.”
He added: “In 2014 we will mark 100 years since the first scheduled commercial air service was inaugurated. Over aviation’s first century, our world has changed for the better in many ways. The industry evolved into a powerful draft horse connecting people and growing economies.
“Governments should keep this in mind when developing policies or deciding taxes. Supporting aviation’s enabling capabilities pays big economic dividends.”
Tyler said optimism over improving results must be tempered “with an appropriate dose of caution”.
He said: “It’s a tough environment in which to run an airline. Competition is intense and yields are deteriorating. Cargo volumes haven’t grown since 2010 and cargo revenues are back at 2007 levels.
“The passenger business is expanding more robustly. Some airlines will out-perform our estimates and others will under-perform. But, on average, airlines will only make a net profit of about $5.94 per passenger in 2014.”
Passenger numbers are expected to reach 3.1 billion this year and rise by 6% to 3.3 billion in 2014.
But industry-wide average yields are expected to fall by 0.2% in 2013 and by 0.6% in 2014 due to intense competition.