Europe: As for the European airlines, the IATA expects this year s profit to reach $800 million vers

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Leaving behind the effects of an unstable oil price scenario and sluggish world trade, the global airline industry business travel news is expected to perk up through 2013 on improved passenger traffic and freight volumes. This improved backdrop is reflected in the International Air Transport Association's business travel news (IATA) projections for this year that show the industry generating $10.6 billion in profits this year, up from their earlier forecast of $8.4 billion.
North America: North American airlines display strong growth prospects business travel news for the coming months courtesy of disciplined capacity, rising travel demand and a number of new and enhanced ancillary revenues. The carriers are performing impressively in terms of customer service including on-time arrivals, advanced baggage handling systems, fewer customer complaints, lower cancellations and overbooked flights.
Asia-Pacific: These carriers are expected to record a profit of $4.2 billion in 2013, much more than $3.9 billion recorded in 2012. The expected boost in cargo performance will aid the profitability level. Notably, this is the sector s highest profit-producing region outside the home market.
Middle East: Per IATA, profits from the Middle East carriers are expected to grow to $1.4 billion compared with $900 million in 2012. The region will likely witness strong traffic growth owing to expansion of connectivity to emerging markets.
Latin America: Profit projection for the Latin American carriers was pegged at $600 million, business travel news almost double the 2012 profit. Growing demand business travel news and capacity expansion initiatives will offset the volatility in the domestic scenario.
Africa: African air carriers are expected to post profits of $100 million this year, after a loss of $100 million in 2012. Over the last few quarters, this territory has attracted immense attention, owing to the untapped business opportunities business travel news it offers.
Europe: As for the European airlines, the IATA expects this year s profit to reach $800 million versus $300 million in 2012. Although the Eurozone woes will continue business travel news to linger, airline activities are expected to improve based on robust services on long-haul routes to emerging markets.
Passenger Cargo: While economic business travel news instability in several business travel news regions like Europe and Latin America will keep travel growth at check, markets in Asia, the U.S. and the Middle East will continue to boost growth in the first half of 2013. The IATA projects global airline passenger growth of 5.4%, while cargo business will see expansion of 2.7%.
Coming to demand-supply balances, demand (measured in traffic) will outpace capacity (combined passenger and cargo) as the year advances. Capacity is expected to show an increase of 4.0% while air travel demand is expected to see a 4.7% pickup.
Fuel Price Effect: business travel news Airline profit outlook depends on fuel prices, the major variable component in the industry. Average crude oil prices remained relatively flat year over year at $94.05 per barrel in 2012. Lower fuel price no doubt cuts the airlines operating expenses, but it also indicates a slowing economy and the consequent fall in global air travel demand.
However, if pricing remains stable despite business travel news an uncertain macroeconomic outlook, the carriers will likely experience better business travel news profitability. The Association projects fuel cost of $216 billion in 2013, accounting business travel news for 33% of the overall operating costs.
Service and Fleet Restructuring: Most of the air carriers at large are scrapping or cutting flights in many small and unprofitable airports in order to reduce their fuel cost burden. The companies are also working on replacing old and depleted business travel news airplanes with new and upgraded ones. Though initially expensive, the new and improved aircraft are more fuel efficient than the existing ones and will help in lowering operating and maintenance costs.
In the coming two decades, global airlines are expected to invest nearly $3.5 trillion to buy about 27,800 new airplanes. For this, they are banking on top aircraft manufacturers such as The Boeing Company (
and Airbus. Over the long run, the carriers aim to replace their old narrow-body jets -- A320 s/B757-200/300 -- with advanced narrow-body airplanes such as A320 Neo and the 737 Max, enabling better services to customers and maintaining equilibrium between demand and supply.
Hawaiian Airlines, Inc, a subsidiary of Hawaiian Holdings Inc. ( HA ), entered into an agreement with Airbus to purchase 16 new A321 Neo aircraft between 2017 and 2020. The deal also has the option of acquiring nine additional aircraft.
Jet Renovation: business travel news With flyers demanding comfortable and quality services business travel news along with proper security, airlines are focusing on aircraft redesigning by offering new and attractive products business travel news and services within the travel plan.
recently launched new Fly Delta application for iPad users. The company targets investing business travel news more than $2 billion through 2013 on improved products, services and airport facilities in the air and on the ground.
business travel news is upgrading its 737-700 fleet with the new Boeing Sky Interior, business travel news and renovating in-flight cabins and decorating interiors (known as Evolve) to improve customer satisfaction and experience. Additionally, the company business travel news is offering Row 44 WiFi technology-based business travel news facilities like Live Television. The company is also expanding seating capacities in Boeing 737-700s planes.
Hedging Strategies: Hedging business travel news strategies are used by airline companies to cope with the rising fuel prices. The carriers use a combination of calls, swaps and collars at varying WTI crude-equivalent price levels to hedge.
Although U.S. airlines experienced sluggish growth over the last few months, the demand for air travel is expected to nearly double over the next 20 years, as predicted by the U.S. Federal Aviation Administration (FAA). Passenger enplanements is expected to grow 2.8% to 757.2 million in 2014 and about 2.1% in the future years, reaching business travel news $1.0 billion by 2027 and nearly $1.15 billion by 2033.
The FAA projects air traffic, customarily measured in billions of revenue passenger miles (implying a unit of one mile flown by one passenger), to grow many folds over the same period. Revenue passenger business travel news miles will jump from 815 billion reported in 2011 to 1.46 trillion by 2033 at an average annual rate of 2.8%.
International traffic is forecasted to move up 4.0% per year, reaching 402.9 million in 2033. Domestic travel will grow at a more modest clip of 2.7% annually. This projection assumes a steady economic recovery with no major headwinds like a large rise in oil price, swings in macroeconomic policy or financial meltdowns. Further, major North American airlines will raise capacity (available seat miles) at an annual rate of 2.0%, reaching 1.06 trillion by 2033.
We believe industry consolidation and various ancillary revenues will boost the profitability business travel news and cost performance of most air carriers going forward. This is an opportune moment for companies to consolidate in order to boost profits and enhance operational efficiency.
Additional Revenue Gains: A number of supplementary revenue streams helped the airline industry gain ground in 2011 and 2012. Air carriers are adding novel features to their services and expanding new products to improve passenger satisfaction and experience. The IATA projects total revenue of $671 billion business travel news for 2013.
With the aim of enhancing on-board entertainment business travel news choices for flyers, Southwest Airlines announced the offering of on-demand movies on flights. Additionally, the carrier is benefiting from the All-New Rapid Rewards program and increased ancillary product offerings such as EarlyBird check-in, unaccompanied minor travel and pet fees.
Cathay Pacific, Malaysia Airlines, KLM, Delta, Qantas and British Airways have also made Apple Inc.'s ( AAPL ) iPad available to passengers in their lounges, rent them out in the air as well as use them as a self-service kiosk, customer survey tool and food ordering tool.
Moreover, the airlines are also persistently concentrating on distinctive advertising and promotional activities with the help of popular social media outlets that create brand awareness and attract more passengers.
Mergers Acquisitions: Airline companies unite in order to restore lost profits and broaden their perimeter. This was evident in the past three-mega mergers of Northwest Airlines and Delta Air Lines in 2008, United business travel news and Continental in 2010, and AirTran and Southwest in 2011. All three companies -- Delta, United and Southwest -- are the long-term beneficiaries on both capacity and cost fronts.
. In mid-February, the board of directors of both the carriers gave a nod to the pending merger agreement, paving the way for the largest global carrier. In early April, U.S. Bankruptcy Judge Sean Lane gave his green signal for the $11 billion unification, by turning down the application of a planned $19.9 million