Things Looking Up for the Air Travel Industry

March 22, 2013

The vast majority of passengers aboard an airplane fall into one of the following two groups: Those pursuing business or those pursuing pleasure. Unfortunately, when the global economy is in turmoil (as it is right now), both groups tend to travel less. Business travelers trail off because there is less business that needs doing, while vacationers dwindle because less business means less disposable income. Given the facts, it stands to reason that the forecast should be bleak for air travel industry – but in reality it’s just the opposite.

The IATA (International Air Transport Association) released its latest financial prospectus on Wednesday (the first day of Spring) and, surprisingly, the future is looking green – at least, greener than was originally thought.

When compared to estimates made back in December, the report projects greater industry profits in the majority of global regions, an outlook spurred by an expected uptick in revenues. The additional capital, officials believe, will result from an anticipated 5.4 percent increase in worldwide passenger demand in 2013. General Tony Tyler, director of the IATA, seemed somewhat surprised to be able to deliver such an optimistic appraisal, calling it “one of the more interesting developments of the last few years.”

After flying low in 2012 ($2.3 billion) North American airline profits are also expected to ascend to airier altitudes in 2013. The IATA estimates that the continent’s yield will reach $3.6 billion this year, $200 million more than was predicted in December.

It’s tough to pin down precisely why fortunes are improving, but it may be due to healthier global industrial production. The IATA says that, after bottoming out in Q3 2012, the sector is on the upswing again and business confidence is increasing as a result.

We’ll continue to keep an eye on the situation but – whatever the reason – we love to hear that more people are taking to the air. What about you? Any travel plans this Spring?

- By Adam Poltrack