Concerns over China’s economic growth and political risks have prompted the airline industry to trim $700 million off its global profit forecast for 2014, the International Air Transport Association (IATA) said on Monday.
The Geneva-based organization now expects airlines to make a profit of $18 billion this year, for a net profit margin of 2.4%, down from $18.7 billion in its previous forecast in March, but the economic prospects are expected to improve as the year progresses.
World trade has slowed since March, and business confidence has fallen with concerns over China’s economic growth, IATA said in a statement released at its annual general meeting in Doha. The meeting takes place as the industry commemorates the 100th anniversary of scheduled commercial flight.
The global airline industry faces strong headwinds from rising infrastructure costs, inefficiencies in air traffic management, a heavy tax burden and costly regulation, IATA Director General Tony Tyler said.
Tyler said that the aviation industry has changed significantly over the last 100 years – this year, airlines will connect 3.3 billion people and 52 million tonnes of cargo over 50,000 routes, supporting 58 million jobs and delivering goods with a value of $6.8 trillion.
Airlines continue to deliver great value to consumers, Tyler said. Over the last two decades, the number of city pairs served has doubled while the real cost of travel has halved.
Tyler reiterated the industry’s commitment to working together and with governments in the constant pursuit of improved safety. That commitment is bearing results in aviation’s safety record, according to IATA. In 2013 there were 29 million flights with Western-built jet aircraft and only 12 hull losses. “Flying is incredibly safe. And we are determined to make it safer,” said Tyler.
“The loss of MH370 points us to an immediate need. A large commercial airliner going missing without a trace for so long is unprecedented in modern aviation. It must not happen again. IATA, ICAO, and experts from around the world are working together to identify the best recommendations for improved global tracking. By September, we will deliver draft options to ICAO,” said Tyler.