GENEVA (Dec 10): Profitability of airlines in Asia-Pacific is "likely" to improve slightly in 2025 from 2024 levels, thanks to strong demand and rising load factor in the region which saw the slowest recovery from the pandemic, said the International Air Transport Association (IATA).
Average net profit margin among Asia-Pacific airlines is expected to rise marginally to 1.4% in 2025 from 1.3% in 2024 on higher volume, while revenue per passenger remains unchanged at US$1.80 (RM7.97), IATA said in its 2025 airline industry financial outlook.
This is behind the global average net profit margin of 3.6% and revenue per passenger of US$7 expected in 2025, the association's data showed.
International revenue per kilometre in Asia-Pacific has yet to reach pre-pandemic levels as at 2024, dragged by slow travel rebound in the biggest market — China — which constituted 40% of the region's traffic.
"Asia-Pacific also saw the sharpest drop in yields" compared with other markets last year, IATA said. However, the low base in passenger recovery leaves more room for double-digit growth in 2025 for both demand and capacity, the data showed.
For the longer term, Asia-Pacific international traffic is seen rising 5.6% on average in 2023-2043, behind Asean's 6.1%.
For next year, global passenger traffic is expected to grow 6.2% to exceed the five billion mark for the first time to 5.2 billion.
Meanwhile, global airline operating costs are expected to grow 4% in 2025, which could drag global yields to 3.4%, while load factor is seen staying elevated after hitting records of 83% to 84% this year.
That said, real air fare or air ticket prices adjusted to inflation "has not stopped declining", said IATA.
Despite sustained supply chain issues putting a cap on growth next year, a "major driver" for airlines is the expected in the form of low oil prices, which would ease costs while supporting gross domestic product growth, and in turn support spending power and airline travels.
Jet fuel price average is expected to average US$87 per barrel in 2025, from US$99 this year on lower oil prices and crack spread crude oil. "Fuel is expected to account to 26.4% of operating costs in 2025, down from 28.9% in 2024," IATA said.
"Lower oil prices and resulting fuel costs are a major driver of improved prospects for airlines in 2025," it said.
"Should these not materialise for any reason and considering the industry's thin margins, the outlook could change significantly,” it added.