[070616.EN.AIR] African Airlines Narrow Losses To US$500 Million In 2016: IATA

AIRLINES in Africa are expected to have narrowed their losses 28 per cent in 2016 to US$500 million in 2016, according to the International Air Transport Association (IATA).

A report released at IATA's annual general meeting in Dublin said that net profits per passenger for North American airlines this year is forecast to be about $25.

For Europe, the forecast is for an $8 profit and a loss of almost $6 for every passenger flown by African airlines.

The report also forecasts that capacity growth for African airlines could be 5.3 per cent in 2016, while demand growth will be 4.5 per cent, according to Creamer Media's Engineering News of Johannesburg.

"Carriers in the region continue to confront a plethora of challenges including intense competition on long-haul routes, political barriers to growing intra-Africa traffic, high costs and infrastructure deficiencies," the report said.

"In addition, many major economies on the continent have been hit by the collapse of commodity prices, and the impact that it has had on revenues and the inflow of hard currencies. Unresolved foreign exchange crises are adding to the economic difficulties facing airlines in this region."

IATA economist Brian Pearce said global airline markets and industry performance that air transport remains closely linked to the economic cycle.

"When the world economy is strong, so is travel and the airline industry. It is, however, hard for the industry to prosper during an economic downturn. So the recent signs of a slowdown in various economic cycle indicators is worrying."

An important area of weakness, in Mr Pearce's view, has been world trade, which is critical for the air cargo business. He even expects global cargo revenues in 2016 to fall back to where they were 10 years ago.

Source : HKSG.