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

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. More

Video Sudan School Becomes Target of Aerial Attacks

Dropout rate at an all-time high in South Kordofan state because many schools have been destroyed during 3-year civil war More

Tennessee Songbirds Fly Coop Long Before Tornadoes Arrive

Researchers say birds apparently alerted to danger by sounds at frequencies below range of human hearing More

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.
US: Response to Sony Hack Will Be Proportionali
X
Aru Pande
December 19, 2014 1:45 AM
The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video US: Response to Sony Hack Will Be Proportional

The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid