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The situation facing Indian carriers has been reflected worldwide with the profits of global airlines declining by a whopping 60% in the fourth quarter this year compared to last year, in spite of a 5.7% rise in passenger demand.
The sharp decline in profits in Q4 came as airline share prices flattened in February with rising fuel costs putting downward pressure on margins, the latest figures of the International Air Transport Association (IATA) showed.
Global traffic results for January showed a 5.7% rise in passenger demand, but there was an eight per cent decline in air freight compared to the same month in 2011.
Domestic markets outperformed international markets in aggregate "as strong demand in Brazil, China and India helped to push domestic traffic up 6.1% compared to January 2011," the figures of the global airline body showed.
However, the upward trend in passenger yields showed signs of weakening at the end of 2011, although the rise in fuel prices and load factors in January may push them up again, IATA's latest report 'Airlines Financial Monitor' said.
The figures showed that the overall downward pressure on airlines' profits continued. "Compared to Q4 2010, net profits have contracted by 60% for the industry overall. This continues the weakness started in Q4 2010, with slowing demand and high fuel prices keeping profits down," the report said.
It said worldwide air travel was 5.7% higher in January than a year ago, but air-cargo markets were down eight per cent.
IATA director general Tony Tyler said, "The airlines face two big risks: rising oil prices and Europe's sovereign debt crisis. Both are hanging over the industry's fortunes like the sword of Damocles."
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