Wednesday, August 6, 2014

Global Impact: Jury Still Out on IATA Profitability in 2014, Although Forecast Projected to Exceed 2013

According to Reuters, the outbreak of the Ebola virus in West Africa, conflict in the Middle East and a possible trade war with Russia could all hurt air travel this year, a leading industry group said.

"All have the potential to dent demand," Tony Tyler, Director-General of the International Air Transport Association (IATA), which represents around 240 airlines, said on Wednesday (August 6).

The Ebola outbreak that began in West Africa in March has already killed 932 people so far and governments and global health authorities are struggling to neutralize the disease spreading.

Tyler said Ebola could be one of the biggest challenges this year for some airlines, even though the World Health Organization (WHO) says the risk to plane passengers from Ebola is low and has not recommended travel restrictions.

Nevertheless, France, Germany, Greece and the US are advising their citizens to avoid traveling to the areas of West Africa worst hit by the virus. 

COMMENT: British Airways has suspended flights to Liberia and Sierra Leone until the end of month, while Emirates has suspended flights to Guinea.Two regional African airlines, Nigeria's Arik and Asky, have cancelled all flights to Sierra Leone and Liberia.  

Africa's airlines are already struggling to fill seats, with aircraft capacity estimated at two-thirds full; demand dropped 2.7% in June.

Brussels Airlines, one of the few still flying to Guinea, Liberia and Sierra Leone, said staff at airports and on its planes were equipped with thermo-scanners to check passengers for signs of fever, one of the main symptoms of the Ebola virus. 

Jetliners are also stocked with special medical kits in the event of a passenger falling sick on board. "But we have not seen a drop in demand, nor have we reduced our flights," a spokeswoman for the airline, part-owned by Lufthansa, said

The threat of a trade war with Russia was also a growing threat to air travel this year, IATA said.


Russia has threatened to retaliate for the grounding of a subsidiary of national airline Aeroflot because of EU sanctions. One newspaper reported that European flights to Asia over Siberia could be banned. 

Ruxandra Haradau-Doser, an analyst at Kepler Chevreux, said avoiding Russian airspace could cost Lufthansa, for example, an estimated 100-150 million euros($134-$200 million) a year.

IATA forecasts global airlines will make a combined profit of $18 billion this year, up from $10.6 billion in 2013.