Airlines Expect Greater Profitability in 2015 as Oil Prices Fall

The significant drop in oil prices, a moderate growth in air cargo shipments, and stronger economic growth across the globe will result in a significant increase in airline profits, an industry trade group said Wednesday.

Consumers, however, may only see a small drop in airfare, as airlines continue their spending spree on new airplanes and other improvements.

The International Air Transport Association said that the world’s airlines would report $25 billion in collective net profit for the coming year, a 26% increase from $19.9 billion for 2014.  The group revised its 2014 estimate in June, increasing it from $18 billion.  The industry saw $11 billion in combined profit in 2013.

The average airline fare would drop 5.1% from 2014 levels, the group said, after adjusting for inflation.  Cargo rates are expected to fall by 5.8%.

IATA, which represents 250 of the world’s airlines, said it expected the full-year average price of a barrel of oil to be $85, the first time that the average oil price would be below $100 per barrel since 2010, when the price was $79.4 per barrel, and that it expects jet fuel to be $99.9 per barrel.

(Photo: Accura Media Group)