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Higher profit forecast for airlines in 2013

June 03, 2013|By Hugo Martin
  • Profits are expected to rise for the world's airlines in 2013.
Profits are expected to rise for the world's airlines in 2013. (Michael Robinson Chavez…)

By packing in more passengers per plane and collecting fees to check bags, among other charges, the world's airlines are projected to collect $12.7 billion in profits in 2013.

The forecast, made by the International Air Transport Assn., the trade group for the world's air carriers, is $2.1 billion higher than the group predicted for the year only three months ago.

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Tony Tyler, the group's chief executive and director general, attributed the rosier profit forecast to several factors, including increased efficiency by the airlines.

For example, he noted that an average of 80.3% of all seats on the world's airlines are filled, a record high and a significant increase compared with an average rate of about 72% in 2008.

Another factor that will contribute to higher profits, Tyler said, are rising revenues from passenger fees, such as charges to check bags, buy food, connect to onboard Wi-Fi and upgrade to roomier seats.

But he noted that despite the higher profit forecast, the industry is expected to achieve an overall 1.8% net profit margin for the year.

In comparison, the industry earned 2.9% net profit margin or $14.7 billion in 2007 and a 3.3% margin or $19.2 billion in 2010, according to the group.

"If you want to think about it another way, the airlines are making a profit of about $4 a passenger, which is less than what you would pay for a sandwich in most parts of the world," he said.


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