Airline profits growth slows in 2013, trade group says

The world’s airlines have been enjoying a surge in demand in recent years, leading to growing profits.

But the profits for 2013 won’t grow as fast as previously expected because of an oil price spike and disappointing growth in emerging markets, according to an estimate by the International Air Transport Assn., the trade group for the world’s airlines.

The group had previously projected $12.7 billion in airline profits around the globe but adjusted that estimate down to $11.7 billion for the year.

Still, the trade group pointed out that the profits are a significant improvement from the $7.4 billion in profits of 2012.

“Overall, the story is largely positive,” said Tony Tyler, IATA’s director general and chief executive. “Profitability continues on an improving trajectory. But we have run into a few speed bumps.”

In North America, airlines are expected to generate $4.9 billion in profits, more than double the $2.3 billion profit of 2012.

Airlines have been able to absorb the higher fuel prices larger because of consolidations and mergers and extra revenue from bag fees, reservation change fees and other passenger charges, the group said.

Passenger demand is expected to grow by 5% in 2013, reaching 3.12 billion fliers by the end of the year.

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