Airlines around the world expect falling oil prices and stronger demand for travel and cargo to support growing profitability in the period ahead, new figures show.
The International Air Transport Association (IATA) airline business confidence index for October found 65 per cent of airline chief financial officers and heads of cargo expected profitability to improve over the next 12 months.
The figure was up from a little over 63 per cent a year ago.
“Respondents reported seeing a decline in input costs … largely due to a fall in crude oil prices over recent months, and expect the trend to continue during the year ahead, which is consistent with the positive outlook for profitability,” the IATA report said.
“There is also confidence that air transport volumes will continue to expand over the next 12 months, supporting the expectation for profit improvements.”
The report said a stronger US dollar and increased oil supply in the US had led to a drop in fuel prices.
While those surveyed said yields – an industry term measuring average airfares per passenger – continued to fall in the three months to September 30, the rate of decline had slowed compared with the previous three months.
Moreover, there was a belief that yields would stabilise over the next 12 months.
“The expectation for stronger growth in air transport demand for the year ahead should limit further decline in yields,” the report said.
Almost eight in 10 respondents said traffic volumes would grow in the year ahead, while 61.5 per cent were tipping an increase in cargo volumes over the next 12 months.
Qantas recently said it was back in the black during the three months to September 30, having posted a $2.8 billion statutory net loss in 2013/14 due to massive non-cash writedowns on the carrying value of its aircraft.