Dismal outlook for airline industry profits

[Slats7]

ASIA-Pacific airlines are expected to be the most profitable of those in any region this year, but profits will be about a fifth of the $US10 billion earned last year.

The International Air Transport Association estimates Asia-Pacific carriers will earn a combined profit of $US2.1bn this calendar year, down from $10bn last year.

However, the Asia-Pacific will be the only area where demand increases are expected to outpace capacity growth as the impact of the Japanese earthquake and tsunami is more than offset by robust growth from both India and China.
This will see demand in the region grow by 6.4 per cent to outpace capacity growth of 5.9 per cent, it said.

The world’s international airlines are now expected to earn less than half the profit they predicted in March and 78 per less than last year after a string of natural disasters, political unrest and rising oil prices.


Dismal outlook for airline industry profits as IATA slashes 2011 forecast | The Australian

 

[Chatterbocks]

Never fails to amaze me what a poor business model it is running an airline. Most of the time I fly, the planes are 90%+ full and still they can't make money...and then if something major happens (September 11, GFC etc) - they go bankrupt at the drop of a hat

 

[russ]

The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

Couldn't have said it better myself!