Global airlines raised their forecast for 2015 industry profits by more than 17 per cent to US$29.3 billion on Monday, almost doubling from last year and heralding a boom for carriers in North America that stand to reap half the worldwide total.
The International Air Transport Association (IATA), announcing the upgrade during a gathering of 260 member airlines, said lower oil prices were the main factor pushing the industry further into the black. But the windfall could be muted by the rise in the value of the dollar and widespread airline fuel hedging.
“The industry’s profits are far from uniform. Many airlines still face huge challenges,” IATA director general Tony Tyler said in a declaration to the airline lobby’s annual meeting.
IATA had previously forecast a $25bn profit this year.
It said the industry’s average net profit margin would almost double to 4 per cent from last year’s 2.2 per cent. It saw the fuel bill dwindling to $191bn from $226bn in 2014, when airlines made a restated profit of $16.4bn.
At the same time, planes are expected to fly fuller than ever before as the industry continues to match capacity more closely to demand, though some airline bosses meeting in Miami are worried such discipline could start to fray.
“A focus on efficiency is seeing supply matched more closely than ever with demand and is expected to produce a record high load factor of 80.2 per cent,” IATA said, referring to the proportion of seats sold on an average flight.
The forecasts came alongside figures showing that airlines are set for a significant breakthrough in 2015, delivering returns on capital invested in them that exceed the average cost of that capital for the first time in the industry’s history.
Although some airlines generate significant profits when the economy is strong, high costs such as labour and fuel, and intense competition, have given air transport a chronic reputation for destroying value for investors.
This year, the industry, which employs 2.5 million people, is expected to generate $4.9bn of value for investors, helped by restructuring and low interest rates, IATA said.
But it noted that high returns are not widespread outside North America where, unlike many foreign rivals, airlines have felt the full benefit of cheaper fuel denominated in dollars.
An expected 7.5 per cent net profit margin in North America, fuelled by profits of $15.7bn, contrasts with profit margins of 2.5 and 2.8 per cent in Asia and Europe respectively.
Asian carriers are exposed to doldrums in the cargo industry and China’s slowdown, while Europe is hurt by the weaker euro.
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In the Restaurant: Society in Four Courses
Christoph Ribbat
Translated by Jamie Searle Romanelli
Pushkin Press
Gulf Under 19s final
Dubai College A 50-12 Dubai College B
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The years Ramadan fell in May
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
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