Experts predict North America will lead global aviation industry performance
Thursday, December 13, 2012
Securing suitable accommodation at a reasonable rate is a challenge for even the most experienced executive. Serviced apartments and corporate housing represent excellent value and provide business travelers with unparalleled service, making them an ideal alternative to corporate suites offered by chain hotels. However, while there is much room to maneuver when it comes to accommodation, airfare represents a sizable portion of most executives' travel budgets. Despite rising fuel costs and global economic uncertainty, the aviation industry could see significant gains moving into 2013.
Business Travel News reports that the International Air Transport Association (IATA) has revised its economic forecasts for the aviation industry. While GDP growth in many developed nations has stagnated in recent months, the consolidated approach taken by many major airlines is proving a successful strategy. Alliances between carriers and joint ventures, such as the recent announcement between Delta and Virgin Atlantic, have created "economies of scale" that have yielded benefits for both airlines and business-class passengers.
The IATA revised previously forecast earnings in the global aviation industry based on recent developments and statistics. In October, the IATA predicted that the world's airlines would post net profits of approximately $4.1 billion. Based on recent activity in the aviation industry, and the robust growth observed in the executive travel sector, IATA officials now believe that global airline profits will exceed $6.7 billion next year. Most of the anticipated growth is expected to come from North American carriers.
Passenger demand is likely to increase by around 4.5 percent, but rising fuel costs and uncertain GDP growth could still pose problems for the sector.
"It is good that we are moving in the right direction, but the year ahead is shaping up to be another tough one for the industry," said Tony Tyler, director general of the IATA, as quoted by the news source. "After taking in an expected $637 billion in revenues, a net profit of $6.7 billion is a net profit margin of 1 percent. And $8.4 billion on expected revenues of $659 billion in 2013 will mean a net profit margin of 1.3 percent. The industry is keeping its head above water. But only just."
Ambitious expansion plans
Tyler's remarks will likely ring true for many airlines and companies alike moving into 2013. Emerging markets in Asia represent significant growth potential, and some carriers are aggressively pursuing new business in the continent, specifically within the business travel sector.
Bloomberg reports that Australian aviation giant Qantas is planning to restructure its routes to destinations such as Hong Kong and Singapore to capitalize on the growing demand for executive-class travel throughout the Asia Pacific region. Scheduling of flights to these areas is a primary concern for executives at Qantas, as currently, many business travelers spend a significant portion of the working day in the air due to scheduling inefficiencies.
Qantas also recently announced plans to shift its European flight hub from Singapore to Dubai to maximize the number of business flights taken to and from the United Arab Emirates. Officials believe that capitalizing on executive passengers and providing heightened service to emerging markets is crucial to achieving long-term expansion objectives.
While official announcements regarding Qantas' restructuring in Asia will be made in January, Andrew McGuinness, a spokesman for the airline, reiterated that no new routes will be established at that time. He did, however, say that a new "sleeper service" will be introduced for premium passengers to six Asian cities at some point in the new year.