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Airfares to drop in 2014
Wednesday, 04 June 2014
Airfares are expected to fall by 3,5% in 2014 compared with last year in order for the industry to remain competitive. This is according to the Economic Performance of the Airline Industry report that was launched at the Iata AGM this week. 

The drop in airfares comes as airlines are still struggling to keep their heads above water and are crippled by fuel costs that are at an all-time high. Tony Tyler, Iata’s director general and ceo, says: “This year we expect airlines to achieve a collective global profit of $18bn (R192bn). That sounds impressive but the brutal economic reality is that on revenues of $746bn (R7,9trn) we will earn an average nett margin of just 2,4%. That’s less than $6 (R64) per passenger. Some airlines will do better. But even if you’re smart or lucky enough to be one of those, every day is still a struggle to keep revenues ahead of costs.”

According to Tony, there is a definite mismatch between the value that the industry contributes to the economies – airline revenues now total 1% of global GDP – and the rewards that generate for those who risk their capital to finance the industry. He called on governments to facilitate airlines’ work and ease taxes. “Governments should understand that the real value of aviation is the global connectivity it provides and the growth and development it stimulates, not the tax receipts that can be extracted from it.”
By : etnw
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