IATA Predicts Record Airline Profit As Price of Oil Plunges

Travelers could soon see ticket prices drop, said the chief of IATA on Wednesday following the prediction of the global airline association that airlines would enjoy record profits because of the plunge in oil prices.

It is expected that airlines will now make profits totaling $19.9 billion in 2014 and at least $25 billion during 2014, which is more than double from the 2013 total of $10.6 billion.

Stronger growth of worldwide GDP and lower prices for oil are the two biggest drivers behind the industry’s improved profitability said the IATA in a prepared statement.

The price of crude has plunged by over 40% since the beginning of June. Part is because of the glut in supply as the U.S. increases it shale production.

Tony Tyler the chief at IATA said that travelers would stand to be beneficiaries from the slide in crude prices.

A stronger performance in the industry is welcoming news for all. It is an industry that is highly competitive and travelers and shippers will experience lower prices in 2015 as the lower prices of oil starting to make their impact.

A healthy air transportation sector is helpful to governments in the overall objective to help increase economic growth that is needed to put the financial crisis worldwide behind everyone, added Tyler.

The forecast for IATA is based upon the average price of Brent of $85 per barrel and of jet fuel of $99.91 per barrel during 2015.

Crude prices are currently just over $62 per barrel and are forecasted to keep falling in 2015, especially since OPEC decided it would keep its current level of output in place.

Next year, airlines in North America are expected to earn the largest amount of profit of $13.2 billion.

Carriers in the Asia-Pacific region are expected to earn more than $5 billion, while airlines across Europe are projected to rake in $4 billion.

Airlines across the Middle East are expected to earn profits of $1.6 billion, those throughout Latin America are expected to earn a combined $1 billion and airlines in Africa should earn $200 million.

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