Falling oil prices to drive down airline ticket costs
Consumers set to benefit as lower industry costs and efficiencies passed through
Travellers will be pleased that plummeting oil prices are set to have a positive impact on airline ticket prices. The International Air Transport Association (IATA) has announced an improved outlook for industry profitability in its Economic Performance of the Air Transport Industry report.
On a per-passenger basis, airlines will make a net profit of $7.08 in 2015, more than double the $3.38 earnings achieved in 2013. As lower industry costs and efficiencies are passed through, consumers are set to benefit substantially.
After adjustment for inflation, average return airfares are expected to fall by some 5.1 per cent on 2014 levels (excluding taxes and surcharges). “While we see airlines making $25 billion in 2015, it is important to remember that this is still just a 3.2 per cent net profit margin”, said IATA director general Tony Tyler.
The industry story is largely positive, but there are a number of risks in today’s global environment—political unrest, conflicts, and some weak regional economies- among them. And a 3.2 per cent net profit margin does not leave much room for a deterioration in the external environment before profits are hit,” he added.
- Log in to post comments