IATA: Industry not confident of improvements in next year

Boeing 747-8 Freighter

Profits are unlikely to improve over the next 12 months, demand probably will not increase and cargo yields are likely to keep struggling, according to the International Air Transport Association (IATA) airline business confidence index July 2016.

Of the chief financial officers and heads of cargo surveyed, 45.7 per cent said profits will decrease in the next 12 months and 14.3 per cent believe there will be no improvement.

IATA insists the result is not necessarily bad news, saying: “To be clear, this is not a signal of an imminent drop in profitability: in fact, the result reflects no expected change from what is actually a relatively healthy financial position for the industry.”

Freight demand remains subdued, with 48.5 per cent predicting no-change over the next 12 months and only 42.4 per cent expecting an improvement, which IATA says is the lowest since April 2009.

Overcapacity remains an issue, with 48.4 per cent predicting no improvement in yields and 41.9 per cent expecting them to go down. Of the respondents, 65.6 per cent told IATA yields have fallen over the past three months, and another 31.3 per cent reported no change.

IATA says: “The results of the July survey show that cargo heads do not expect any respite for yields over the next 12 months; a combined 90% of respondents expect cargo yields to remain unchanged or to fall further in the year ahead.”