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Fuel likely to drag on airline profits this year: IATA chief

IATA has signalled that its forecast of a $38 billion profit for the airline industry this year will be revised downwards due to the higher price of fuel, but carriers are now better placed to withstand the challenge.

Addressing reporters in Sydney ahead of its annual general meeting, IATA’s director-general and chief executive Alexandre de Juniac said that the forecast released in December was predicated on an oil price of $60 per barrel, but it is now approaching $80.

“In the past, such a rapid rise in a key input cost might have plunged the industry back into losses. As a result of the efforts of the industry to restructure and re-engineer their businesses, we are still expecting solid profits this year. But probably not at the levels we were anticipating in December,” he adds.

The industry association will release its updated forecast for airline profits this year on 4 June during the AGM.

Despite concerns about the rise in the price of oil, de Juniac says that the industry continues to grow strongly, with global passenger numbers up 6.2% in April, while cargo grew 4.1%.

Echoing recent comments from Airlines for Australia and New Zealand, de Juniac also attacked airport charges in Australia and called for an “effective regulatory solution” to keep charges competitive amid the natural monopolies that most airports in the country operate under.

“Without getting into the nitty-gritty details, anyone who has traveled knows that it is cheaper today than it was a decade ago. But airlines have not seen similar decreases in their airport costs,” he says.

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