The head of the aviation industry trade body has declared airlines make less per passenger than it costs to buy a packaged sandwich.
At the IATA summit in Cape Town, Tony Tyler said flagship carriers are making around a £2.62 profit per head.
These tiny profits are up on last year at just over £1.50 per head.
241 IATA members made £8.32 billion last year.
The industry struggles on with tiny profits where a 10% margin is a substantial goal for most of our airlines.
In our volatile industry, oil has the largest impact on an airlines profitability, it’s been steeply rising since 2006 and we’re still experiencing the toughest economic climate since the 1930s.
Airlines hold some confidence now for future prospects. There has been a rise in premium traffic and an increase in profit from ancillary sales such as seat selection and carrying baggage, these used to be included in the price.
Airlines have cut costs with initiatives like e-ticketing as well as large mergers taking place. Tom Horton, chief executive of American Airlines which has merged with US Airways, believes more could be in the offing. “I think the big question is whether there will be cross border consolidation,” he said.
Christoph Franz, Lufthansa’s chief executive, believes more mergers are necessary. “The industry still has undoubtedly too much capacity because of its inability to consolidate.”