What Does IATA See For Airline Industry In 2012?

From Yong Soo Heong GENEVA, Dec 7 (Bernama) -- In an industry that sees 7.6 million people flying into the air daily and having carried 23 billion people and 426 million tonnes of cargo over the past decade, the importance of aviation to the global economy is something that one cannot take for granted. As such, the annual forecast of the International Air Travel Association, or more popularly known as IATA, is always eagerly watched by those involved in the air transportation business. IATA, which was founded in 1945, represents about 230 airlines from 118 countries. Later Wednesday, Tony Tyler, who took over as IATA's Director-General and CEO from July 1 this year, is expected to deliver the association's prognosis on the prospects for the industry. So will the global airline industry be able to register after-tax profit of US$6.9 billion this year? Even if it did, this surely pales in comparison with the 2010 achievement of US$16 billion. And with the economic turbulence experienced in many parts of the world, especially Europe, will airline profits slump further in 2012? This is being looked at with a keen eye since the financial performance of the airline industry is closely linked to the health of world economies. The reasoning is this: If economic growth is strong, airlines can cope with high fuel prices. But whenever world economic growth slows below 2.0 per cent, then the airline industry may see losses. IATA said in September this year that debt-burdened Western economies look set for an extended period of weak economic growth, or worse. However, developing economies are in a much better shape, despite trade and other linkages to the West, IATA said. Growth opportunities will continue in developing those markets but because the majority of air transport markets are still linked to developed economies, the outlook for the airline industry is also for an extended period of sluggish growth and weak profits. So what are the prospects for airlines in 2012? IATA may have some of the answers later Wednesday. -- BERNAMA