News / Middle East

    IATA: Middle East Turmoil to Cut Into Airline Profits

    IATA's Director General and CEO Giovanni Bisignani talks to journalists at the IATA's (International Air Transport Association) AVSEC conference in Frankfurt, central Germany (File Photo)
    IATA's Director General and CEO Giovanni Bisignani talks to journalists at the IATA's (International Air Transport Association) AVSEC conference in Frankfurt, central Germany (File Photo)

    The International Air Transport Association says airline profits this year will be cut by nearly 50 percent because of higher oil prices, largely due to turmoil in the Middle East. IATA is downgrading its airline industry profit outlook for 2011 to $8.6 billion - from about $16 billion profit reported by the airlines in 2010. 

    Political unrest in the Middle East has pushed oil prices to more than $100 a barrel. This is substantially higher than the $84 per barrel the International Air Transport Association predicted in December.  

    The IATA report says rising oil prices are always a challenge for airlines, and the events in the Middle East pose a significant risk.  

    IATA Director General Giovanni Bisignani says the impact of higher fuel prices is lessened by the global economic recovery, but the airline industry still faces significant hurdles.

    We have an industry that is always stumbling from a crisis to another crisis, from a shock to another shock, with a margin, as I mentioned before, more similar to a charity association than a real business. This is an industry that is not sustainable in the long term.”  

    The report finds Asia-Pacific carriers will earn the biggest profits this year. But even in Asia, the expected collective profit of $3.7 billion is substantially down from the $7.6 billion the region’s carriers made last year.  

    The report says profit for North American carriers in 2011 is expected to fall to $3.2 billion, which is about $1.5 billion less than in 2010.

    Bisignani says Europe’s carriers remain the least profitable among the major regions.  Europe's airlines are expected to make only $500 million in profit this year. As for the situation of Middle Eastern carriers, he says their 2010 profit of $1.1 billion will shrink to $700 million.

    “One of the reasons is quite clear was this turmoil in the political situation. We have the cases of Egypt, Libya and Tunisia," he said. "There are about 20 percent of the region  traffic and this has been really and very clearly impacted by the overall political situation. In the Gulf region, high oil prices bring economic activity and that is the reason why it perhaps continues to gain market share on long-haul routes.”  

    The IATA report forecasts a sharp decline of profits among Latin American carriers from $1 billion last year to $300 million in 2011.  

    It says African carriers are expected to break even, down from the $100 million profit made by the region last year. The report says strong economic growth and rapidly growing trade links with Asia are keeping African carriers out of the red. But it notes intensifying competition from Middle Eastern carriers and others for lucrative business traffic could spell trouble for African airlines.

    Follow our Middle East reports on Twitter
    and discuss them on our Facebook page.

    You May Like

    Hope Remains for Rio Olympic Games

    Facing a host of problems, Rio prepares for holding the games but experts say some risks, like Zika, may not be as grave as initially thought

    IS Use of Social Media to Recruit, Radicalize Still a Top Threat to US

    Despite military gains against IS in Iraq and Syria, their internet propaganda still commands an audience; US officials see 'the most complex challenge that the federal government and industry face'

    ‘Time Is Now’ to Save Africa’s Animals From Poachers, Activist Says

    During Zimbabwe visit, African Wildlife Foundation President Kaddu Sebunya says poaching hurts Africa as slave trade once did

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Ivorian Chocolate Makers Promote Locally-made Chocolatei
    X
    July 29, 2016 4:02 PM
    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Ivorian Chocolate Makers Promote Locally-made Chocolate

    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Tesla Opens Battery-Producing Gigafactory

    Two years after starting to produce electric cars, U.S. car maker Tesla Motors has opened the first part of its huge battery manufacturing plant, which will eventually cover more than a square kilometer. Situated close to Reno, Nevada, the so-called Gigafactory will eventually produce more lithium-ion batteries than were made worldwide in 2013. VOA's George Putic reports.
    Video

    Video Polio-affected Afghan Student Fulfilling Her Dreams in America

    Afghanistan is one of only two countries in the world where children still get infected by polio. The other is Pakistan. Mahbooba Akhtarzada who is from Afghanistan, was disabled by polio, but has managed to overcome the obstacles caused by this crippling disease. VOA's Zheela Nasari caught up with Akhtarzada and brings us this report narrated by Bronwyn Benito.
    Video

    Video Hillary Clinton Promises to Build a 'Better Tomorrow'

    Democratic presidential candidate Hillary Clinton urged voters Thursday not to give in to the politics of fear. She vowed to unite the country and move it forward if elected in November. Clinton formally accepted the Democratic Party's nomination at its national convention in Philadelphia. VOA national correspondent Jim Malone has more.
    Video

    Video Trump Tones Down Praise for Russia

    Republican presidential candidate Donald Trump is toning down his compliments for Russia and Vladimir Putin as such rhetoric got him in trouble recently. After calling on Russia to find 30.000 missing emails from rival Hillary Clinton, Trump told reporters he doesn't know Putin and never called him a great leader, just one who's better than President Barack Obama. Putin has welcomed Trump's overtures, but, as Zlatica Hoke reports, ordinary Russians say they are not putting much faith in Trump.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.

    Special Report

    Adrift The Invisible African Diaspora