Airlines need to look at other options to make money: IATA chief economist
NEW DELHI: Airlines need to come out of their core business and look at other options to boost revenue, said the Senior Vice President of Sustainability and Chief Economist at International Air Transport Association (IATA) Marie Owens Thomsen.
The global aviation industry earned a total profit of 36 billion dollars in 2024, translating to a modest margin of just 3.7%, according to senior economist and Vice President Thomsen, who addressed presspersons on Monday. She described aviation as a 'capital-intensive and complex endeavour,' heavily reliant on passenger revenue, which accounts for over 70% of the sector's earnings.
Speaking about rising operational costs, Thomsen noted that fuel alone makes up 26% of the industry's total expenditure. 'In 2025, every passenger flying contributed an average of 7.2 billion dollars in earnings to the aviation sector. In contrast, a passenger in the Middle East brought in 27.2 billion dollars, while in Africa it was just 1.3 billion dollars,' she said, attributing the Middle East's high figure to significant investments in infrastructure.
Thomsen suggested that airlines could explore alternatives like manufacturing their own fuel internally, particularly Sustainable Aviation Fuel (SAF), to ease dependency and reduce long-term fuel costs.
Supply chain disruptions remain a major challenge, she pointed out. 'The industry is severely impacted by delays, especially when it comes to the delivery of regional jets and turbojets,' she said, adding that long waiting periods for aircraft are impeding fleet expansions and operations.
On the question of airfares, Thomsen remarked that fares have been on a consistent downward trend since the industry's early years. 'This decline is likely to continue, thanks in part to the reduction in fuel costs,' she said.
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Time of India
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Advt Airlines are grappling with a skewed value chain globally and historically, the profit margin has never crossed 5 per cent, according to IATA Chief Economist Marie Owens Thomsen Also, she expressed hope that any efforts to address making the airline value chain less skewed will surely be an example for other is one of the world's fastest growing civil aviation an interaction in the national capital this week, Thomsen said the skewed value chain for the global airlines industry is also a result of legacy is the Chief Economist & Senior Vice President Sustainability at the International Airport Transport Association (IATA), a grouping of over 350 airlines."Nobody sat down from the beginning and said, I'm going to create a super skewed value chain and make sure that the airlines never make any money."I don't think anybody had that intent. But unfortunately, that's sort of where we've ended up. And our industry globally has never made a profit margin in excess of 5 per cent," she noting that all participants in the value chain make more money than the airlines, she mentioned about the oligopolistic pricing power among the aircraft manufacturers and the outsized market power of oil companies."... then downstream, you know, notably here in India, maybe a very price competitive environment... our customers choose their airlines primarily on price. So the airlines are left completely squeezed between these two with very few ways out," she Thomsen said that if the Indian government tries to do everything to create a less skewed value chain, and that becomes possible, then that would surely be an example to follow for every other 2025, IATA has projected airlines to report a net profit of USD 36 billion and a profit margin of 3.7 per cent.
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a day ago
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