It seems as though flight times aren’t the only things being padded. The original estimate by the International Air Transport Association that the global airline industry wouldn’t be profitable for three years following the financial crisis gave a little bit of elbow room – something you won’t find on the planes themselves – as indicated by the recent announcement of a predicted aggregate profit of at least $2.5 billion. Back in April, IATA forecasted a $2.8 billion loss for the year.
Demand for seats is on the rise, as people just don’t want to stay home any more. Notes, Giovanni Bisignani, director general of IATA, according to a report in USA Today, “The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated.”
In 2009, the global airline industry suffered an $81 billion loss of revenue – a drop of 14.3 percent from 2008. While that did make seats a bit cheaper, it also led to the slashing of routes and what few amenities were left … not to mention all those additional fees. This year, IATA expects revenues to be up $62 billion relative to 2009, but that still leaves a lot of ground for the airlines to make up. While $2.5 billion sounds like a lot of cash, it only amounts to 0.5 percent of total industry revenue, according to Bisignani.
The industry remains “fragile,” he adds, with a slow economic recovery, vulnerability to Icelandic ashes and other disruptions, Europe’s debt crisis and oil prices threatening what gains have been made.