The world airline industry is continuing to underperform because of price cutting, warns Pierre Jeanniot, director general International Air Transport Association (IATA), forecasting a sharp fall in profits this year.

Preliminary figures from IATA suggest that international airlines earned net profits of around $5 billion last year, despite a real fall in fares. The result would mark an upturn from the dip in 1996, when the profit sank to $4 billion from a peak of $5.1 billion the year before.

Jeanniot says that the outlook for this year is for profits to dip back again to $3.9 billion as carriers are unable to slow capacity growth in response to the Asian crisis. IATAsuggests that carriers operating within or to the Asia-Pacific region will shed a total of $2 billion in profits through to 2001.

Source: Flight International