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Airlines make profit of $10.42 per passenger

3 June 2016

Global airlines made a collective profit of $39.4bn in 2015 or an average of $10.42 per passenger, according to the International Air Transport Association (IATA).

The profits were largely seen in the passenger sector, while cargo business stagnated, and it was only the second time that profits exceeded the cost of capital, it was revealed at IATA’s annual general meeting in Dublin.

Passengers will make 3.8bn journeys by air in 2016 while air carriers will deliver 52m tonnes – or 35% – of the total goods traded internationally.

Cargo demand is expected to grow by 2.1% in 2016 with revenues of $49.6bn, down from $52.8bn in 2015.

IATA director general and CEO Tony Tyler said in his opening address that airlines were fighting charges increases in the Middle East, where he accused some governments of trying to make up for lost oil revenues.

IATA also called on governments to adopt a single global carbon offset mechanism to address carbon emissions from international aviation.

Tyler said improvements to technology, operations and infrastructure and sustainable alternative fuels meant airlines were meeting climate change commitments.

But he said if they were to achieve carbon-neutral growth from 2020, a mandatory global carbon offset scheme was essential.

“That mechanism should be simple, mandatory and applied on a global basis, avoiding the cost and complexity that a patchwork of uncoordinated measures would create,” he said.

IATA said it would accept such measures being phased in over time depending on the different levels of maturity in the aviation markets.

Aviation has pledged to improve fuel efficiency by 1.5% annually to 2020, cap net emissions with carbon- neutral growth by 2020, and cut emissions in half by 2050 compared to 2005.

However, IATA has not given details on exactly how carbon emissions would be offset.

IATA has also pledged to help government and conservation organisations in the fight against the trafficking of endangered animals. It called on airlines to increase awareness of the illegal wildlife trade among passengers and other stakeholders and to work with law enforcement agencies and conservation groups to address the problem.

In 2016 fuel is expected to represent 19.7% of the industry’s expenses, down from 33.1% in 2012-13.

IATA has also complained to the European Commission about alleged abuses of dominant positions by manufacturers of aviation equipment.

 “There are relatively few equipment vendors and our members are frustrated that there is little flexibility in negotiations for aftermarket services,” said Tyler.

“Our members want to be able to negotiate contract terms more effectively and with more options than the OEM community will entertain today.”

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