Passenger demand on Middle East airlines is expected to increase this year by 7 per cent, according to the trade body International Air Transport Association (Iata).
Demand will be just ahead of the expected capacity growth of 6.9 per cent, the agency said, overseeing a global aviation summit in Mexico on Tuesday.
However, it will be a year of lower profits this year for the region’s carriers as the operating environment has got tougher over the past six months, Iata said.
Middle East airlines are expected to post a US$400 million profit this year, down from $1.1 billion last year, it said. “Profitability and load factors are down significantly, as traffic and some business models have come under pressure,” Iata said. “There is growing evidence that the ban on large electronic devices in the cabin and the uncertainty created around possible US travel bans is taking a toll on some key routes. Meanwhile, the region is struggling with increased infrastructure taxes [and] charges and air traffic congestion.”
Still, Australia’s biggest airline Qantas remains keen to work with Dubai’s Emirates on routes to Europe, even as it starts to open up more of its own routes, executives said on Tuesday.
Qantas is bypassing Emirates’ hub on a new Perth-London flight and has indicated that it wants to fly to Paris and Frankfurt from Perth.
“Even when we start flying direct to London, still Dubai will play a big role,” the Qantas Group chief executive Alan Joyce said at the Iata meeting in Mexico.
“Emirates has 40 destinations in Europe. We’re never going to fly direct to places like Venice and Prague,” he added.
Globally, Iata, which represents more than 200 airlines, said it expected the industry to generate a $31.4bn profit this year, up from a previous forecast of $29.8bn.
It also raised its outlook for 2017 industry revenue to $743bn from $736bn on expectations that travel demand will increase as the global economy looks set to post its strongest growth in six years.
* with Reuters
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