IATA expects 2020 to be better than 2019 for the global aviation industry!

Hello from Geneva where I am attending the IATA Media Days to get a sense of what is going to be new in the world of aviation and passenger experience. But before I even get there, the hallmark of the industry body’s annual media days is their global economic outlook, which tells us all about how good or bad things could be going forward.

IATA Media Day

At the outset, IATA lowered the estimate of the aviation industry profitability this year to USD 25.9 billion globally, USD 2.1 billion lesser than its own prediction in June 2019 and about USD 10 billion lesser than its forecast from a year ago at USD 35.5 billion dollars. Some of the factors contributing to this are events such as geopolitical tensions, social unrest and the uncertainty around Brexit. Not just that, there is a huge question mark on the return of the 737 MAX.

The trade body expects that 2020 will be better, but predicted that with many riders coming along. The environmental concerns about aviation, which have started to take centre stage in Europe are of key concern. In a small roundtable with IATA Director General & CEO, Alexandre de Juniac, he said the flightshaming movement would perhaps spread even further, first in North America, then in Asian countries such as Japan and Korea before coming around to India and the southern Asian nations.
On the issue of the 737 MAX, Boeing has been building hundreds of the jets in anticipation of an ungrounding, and deliveries would resume once the aircraft is ungrounded (currently expected in early 2020). Capacity will rapidly expand once these jets get back in the air, which may perhaps cause downward pressure on the fares again.
Fragmented taxation could be another reason airlines made less money. In a presentation focussed on the Americas, IATA displayed an instance of how a ticket fare could be half taxes.
An interesting slice and dice show that 30 airlines across the world are making a majority of the profit across the globe, and a huge long tail barely holding on to wafer-thin profits or break even. Airlines would be expected to be overall loss-making across Latin America, Africa and the Middle East. North America will take away 65% of the industry earnings per IATA guidance.
IATA expects 2020 to be better than this year, with an industry-wide net profit of USD 29.3 billion dollars, up from the USD 25.9 billion expected this year. 

 

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