The global aviation industry profit projected for this year has been downgraded from $18.7 billion to $18 billion.
The reduced forecast came from Iata, which blamed a slowing in world trade and a slide in business confidence due to concerns over China’s economic growth and various geopolitical risks.
Air fares are expected to fall by some 3.5% in 2014 compared with the previous year after adjusting for inflation and before surcharges and taxes.
Airlines are expected to make a net profit margin of just 2.4% in 2014, despite the overall projected rise in earnings from $6.1 billion in 2012 and $10.6 billion last year.
Global spend on air transport is expected to reach $746 billion, which equals 1% of world GDP, and passenger numbers are forecast to reach 3.3 billion, according to Iata’s newly published Economic Performance of the Airline Industry report
Airlines are likely to facilitate $621 billion in tourism spend and support 58 million jobs worldwide.
In addition, the industry will take delivery of 1,400 aircraft worth some $150 billion.
These benefits are being generated and investments being made despite persistent weak profitability and a tax burden which this year is expected to reach $121 billion – up from $113 billion in 2013, Iata said.
Director general and chief executive Tony Tyler (pictured) said: “Airlines themselves remain burdened with high taxes and weak profitability. With a net profit margin of just 2.4%, airlines will retain only $5.42 per passenger carried.
“There is a mismatch between the value that the industry contributes to economies and the rewards that generates for those who risk their capital to finance the industry.
“Airline efforts to improve performance further need a counterpart in governments. That means a regulatory structure that facilitates success; the provision of cost-efficient infrastructure to meet consumer and business demands; and a reasonable tax burden.
“Governments should understand that the real value of aviation is the global connectivity it provides and the growth and development it stimulates, not the tax receipts that can be extracted from it.”