Airlines to hit historic high with third successive profitable year

[webfact]

Airlines to hit historic high with third successive profitable year
By Agencies 
Geneva

 

Alexandre de Juniac

 

GENEVA: -- The International Air Transport Association (IATA) projects the global airline industry will make a net profit of $29.8 billion in 2017.

 

Projected total revenues of $736 billion represent a 4.1 per cent net profit margin. This will be the third consecutive year in which airlines will make a return on invested capital (7.9 per cent) which is above the weighted average cost of capital (6.9 per cent).

 

IATA revised its outlook for airline industry profitability this year slightly downward to $35.6 billion, from the June projection of $39.4 billion, owing to slower global GDP growth and rising costs. This will still be the highest absolute profit generated by the airline industry and the highest net profit margin (5.1 per cent).

 

Full story: http://www.nationmultimedia.com/news/business/30301759

 

-- © Copyright The Nation 2016-12-09

[elgordo38]

If and when cheap credit is ever shot down so will the airline business. Its all a credit fueled binge illusionary at best. When the wheels fall off of the credit bandwagon things will come to a rolling stop hmm sudden stop. 

[elgordo38]

So what is his position in line for the Jagger throne? 

[BuaBS]

They should be profitable with the outragous prices for their tickets and unfair pricing depending on when you book.

They're no different than the taxi maffia , just bigger.

[MajarTheLion]

That's wonderful news! The airline business is incredibly tough. The overhead is astronomical. Complying with regulations (most are quite appropriate) are very costly. There are two major uncontrollable variables: fuel costs and weather. Pilots are very skilled and well-paid. The industry is extremely competitive. To be profitable operating in such conditions is to be applauded.

[Trouble]

1 hour ago, MajarTheLion said:

That's wonderful news! The airline business is incredibly tough. The overhead is astronomical. Complying with regulations (most are quite appropriate) are very costly. There are two major uncontrollable variables: fuel costs and weather. Pilots are very skilled and well-paid. The industry is extremely competitive. To be profitable operating in such conditions is to be applauded.

Agree.  4.1% on gross revenues hardly seems exorbitant.  Although fares in some sectors see high, I still have some friends flying LAX to BKK and return for anywhere from $900 to $1100 coach, something I used to pay back in the 90's.  

[MajarTheLion]

2 hours ago, Trouble said:

Agree.  4.1% on gross revenues hardly seems exorbitant.  Although fares in some sectors see high, I still have some friends flying LAX to BKK and return for anywhere from $900 to $1100 coach, something I used to pay back in the 90's.  

 

I just bought tickets from DFW to BKK for $825, LESS than what I paid the first time I went in 2001. My brother just bought tickets LAX-BKK for $500! All r/t prices. Airlines are a favorite whipping boy of the media. Frankly, I think a lot of people just knee jerk without really thinking it through.

[Credo]

I have nothing against them making a profit.   I do with the extreme differences in prices.  If I went into a store to buy a shirt because they were on sale, should the store start raising the price as soon as the shirts start running low?    

 

Not everybody travels for leisure.   Some people travel because they are suffering from medical conditions, have had a family emergency or death or a variety of other reasons.   It's not easy to book a ticket a month in advance for these, but you can bet the person will pay a dear price for it.   

 

 

[MajarTheLion]

Just now, Credo said:

I have nothing against them making a problem.   I do with the extreme differences in prices.  If I went into a store to buy a shirt because they were on sale, should the store start raising the price as soon as the shirts start running low?    

 

Not everybody travels for leisure.   Some people travel because they are suffering from medical conditions, have had a family emergency or death or a variety of other reasons.   It's not easy to book a ticket a month in advance for these, but you can bet the person will pay a dear price for it.   

 

 

 

The law of supply and demand.

[GinBoy2]

I'm with others, Airline industry is horribly tough.

 

Huge capital investment in aircraft, with variable operating costs, mainly jet fuel, with actually return awfully small gross profit (don't get hung up on the $).

 

There was a great article in the Atlantic a few years ago which takes what I think is a rather good look at the industry, and rather dispels those "its outrageous how much they charge" myths.

 

http://www.theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why-nobody-noticed/273506/

 

Two interesting graphs from the articles

 

[MajarTheLion]

21 minutes ago, GinBoy2 said:

I'm with others, Airline industry is horribly tough.

 

Huge capital investment in aircraft, with variable operating costs, mainly jet fuel, with actually return awfully small gross profit (don't get hung up on the $).

 

There was a great article in the Atlantic a few years ago which takes what I think is a rather good look at the industry, and rather dispels those "its outrageous how much they charge" myths.

 

http://www.theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why-nobody-noticed/273506/

 

Two interesting graphs from the articles

 

 

Excellent graphs and info. Note that the US airline industry was deregulated in 1978.

[hawker9000]

Well, BOHICA boys & girls.  Next up on the airline agenda is new fees for carry on bags...   Just a couple of airlines doing it so far I think.  But worry not - sure to catch on!