The International Air Transport Association (Iata) has forecast that the world airline industry will achieve its eleventh consecutive year of profit next year. The industry’s 2020 profit is predicted to come to $29.3-billion, up from the $25.9-billion expected for this year (this latter figure being a downgrade from the $28-billion estimated in Iata’s June forecast).
However, the African region is expected to make a loss next year of $200-million, which is similar to the loss they made this year. The Middle East region will also register a loss, for the third year in succession.
“African carriers continue to suffer structural problems of high costs – in large part owing to government taxes and fees – and low load factors,” explained Iata. “Economic growth in the region has been relatively good and is expected to rise in 2020, but markets are extremely fragmented and inefficiently served in the absence, so far, of a Single African Air Transport Market.”
Globally, however, the airline industry next year is expected to achieve a net profit margin of 3.4%, in comparison to 3.1% this year. Total revenues in the sector are predicted to be $872-billion, representing a 4% increase over the $838-billion in 2019. The return on invested capital is forecast to come to 6%, up from the 5.7% expected for this year. But operating expenses for the industry will also go up, by 3.5%, from $796-billion in 2019 to $823-billion in 2020.
Passenger numbers, worldwide, are expected to rise by 4% from 2019 to 2020, from 4.54-billion to 4.72-billion. Forecast stronger global economic growth should push passenger traffic growth, measured in revenue passenger kilometres, up by 4.1% next year – similar to this year’s 4.2% growth, but lower than the historical trends. The average net profit per departing passenger is predicted to be $6.20 in 2020, up from the $5.70 for 2019.
“Slowing economic growth, trade wars, geopolitical tensions and social unrest, plus continuing uncertainty over Brexit all came together to create a tougher than anticipated business environment for airlines,” pointed out Iata director-general and CEO Alexandre de Juniac. “Yet the industry managed to achieve a decade in the black, as restructuring and cost-cutting continued to pay dividends. It appears that 2019 will be the bottom of the current economic cycle and the forecast for 2020 is somewhat brighter.”