Friday, March 10, 2017

Global airlines' profitablity down

The global airlines' financial results for Q4 2016 show that the decline in profitability, which began in the third quarter of 2016, continued across most regions in the fourth quarter, albeit from historically high levels, a report said.

Global airline share prices continued their positive start to 2017 during February, outperforming the wider global equity market, as expectations for airlines profits improve, particularly in the US, an Iata report said.

Passenger and freight demand both carried momentum into the New Year. The industry-wide passenger load factor remains stable at a record high, and the freight load factor has continued to recover, it said.

Average passenger yields in US$ terms continue to fall, but the recent strength of the dollar may be disguising signs of a stabilisation or slowing of this down-trend, it said.

Premium airfares generally held up better than those of the economy cabin in 2016, and premium’s share of revenues increased on a number of key routes. This has helped to support airline financial performance.

Industry-wide passenger yields have trended downwards since late-2014, and fell by 8.8 per cent in 2016 compared to the previous year. Last year’s development came alongside upward trends in oil and jet fuel prices – along with rising labor costs in some key markets, the report said.

Annual growth in premium passenger traffic typically lagged behind its economy counterpart on the top-10 premium international markets in 2016 (the only exception was traffic on the market between Asia and the Southwest Pacific).

Premium international journeys accounted for 5.2 per cent of the global total over last year as a whole, down from 5.6pc in 2015. Despite having fallen by 7 per cent on average on the key routes in 2016, premium airfares generally held up better than those in economy last year. As a result, premium’s share of revenues increased on the important Transatlantic and Europe-Asia markets, and this has helped to support airlines’ overall financial performance, said the Iata.

Annual growth in industry-wide passenger traffic accelerated to 9.6pc year-on-year in January – its fastest pace since April 2011. Iata estimated that the relatively early timing of Chinese New Year may account for 0.5 percentage points of the annual growth rate in January, but the bigger picture is that the trend in traffic has strengthened into 2017.

Industry-wide available seat kilometres increased by 8pc year-on-year in January. The number of available seats in the global airline fleet increased by 0.4pc month-on-month in January, and by 6.7pc compared with January 2016.

The passenger load factor registered its highest annual average outcome on record in 2016, and has remained elevated into 2017. - TradeArabia News Service

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