Falling fuel price should boost 2015 numbers

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Falling oil prices have carriers forecasting record returns for 2015, as the recent plunge in energy prices starts to be reflected in airlines’ fuel costs.

“It’s going to be six months or so before airlines are seeing lower fuel costs, “ said IATA’s chief economist Brian Pearce this month in Geneva. The lag is due to forward-fuel-buying practices.

The air cargo industry has just completed its best season in years, with airlines expecting to post a collective global net profit for 2014 of US$19.9 billion, up from June’s projection of US$18 billion. According to IATA, the $19.9 billion is now looking to rise to $25 billion for 2015. In addition to lower fuel costs, another driver in the industry is strong worldwide GDP growth.

“It is important to remember that this is still just a 3.2 percent net profit margin,” said Tony Tyler, IATA’s director General and CEO. “The industry story is largely positive, but there are a number of risks in today’s global environment – political unrest, conflicts and some weak regional economies.”

Tyler said travelers and shippers will see lower costs in 2015 as the lower oil prices kick in. Jet fuel is expected to average $99.9 per barrel in 2015. This translates to a total of $192 billion that will be spent on fuel, which represents 26 percent of total airline industry costs.

Airlines registered in the Middle East are in the lead, growing their freight-tonne kilometers (FTK) by 55 percent above their 2010 level. The next best region is Africa, up 16 percent in RTKs over 2010, Latin America at 6 percent, and Europe carriers up 2 percent over that same period.

North American carrier RTKs were down 4 percent over 2010, while Asia-Pacific airlines were down 8 percent.  Average cargo load factor worldwide was about 46 percent.

Cargo volumes are expected to grow by 4.5 percent in 2015, slightly ahead of the 4.3 percent growth expected for 2014. The real cost of transporting goods in 2015 is expected to fall by 5.89 percent. Some 53.5 million tonnes of air cargo is expected to be flown in 2015. Total cargo revenues are expected to rise to $63 billion, still 5 percent lower than 2010.

 

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