Forecast: Airline Profits Up but Cheap Flights Still Possible

Interesting: The International Air Transport Association (IATA) has boosted its overall profit prediction for the world’s airlines this year by a “massive” 73%. The trade group expects profits of nearly $7 billion dollars in 2011, and they mostly credit carriers outside the U.S., citing strong demand in Europe and the Middle East, and even an upturn from Japan which is still recovering from last winter’s devastating earthquake.

However, to put this in perspective, the IATA initially projected profits of well over $8 billion in March, then slashed that projection by more than half this summer.

U.S. Airlines and Airfare Hikes

Now, the picture is relatively bright again for the airlines. And U.S. carriers played a part, too, thanks to the many successful airfare hike attempts I told you about. Plus, this summer’s “ticket tax holiday” proved a real windfall for the airlines. As you’ll recall, government taxes were dropped from plane ticket prices during a 13-day long congressional standoff but passengers saw none of the anticipated benefits in the form of lower ticket prices because the airlines immediately filled the “tax gap” with their own fare hikes (all except Alaska and Spirit that is).

Are Cheap Flights a Thing of the Past?

Despite airfare hikes and rising profits, finding cheap flights is not a thing of the past, not for smart shoppers who use every tool at their disposal. Try these tips to save whenever you want to travel:

Most Successful Airlines

A couple of other interesting nuggets from the IATA projections: Most of the airline profits cited will likely come from Asia-Pacific carriers, which are forecast to generate $2.5 billion in profits. By the way, all these profit predictions might have been higher, but for the rising cost of oil. As the analysts as Zacks point out, expensive fuel is expected to account for 30% of the airline industry’s costs this year; it accounted for just 13% of costs a mere decade ago.


Published: September 22, 2011