Global Airfares Tipped to Fall through 2016: IATA

Good news for the tourism industry from the International Air Transport Association which is predicting cheaper global airfares through 2016 due to greater competition and lower oil prices.

“Further falls in air fares are likely to be seen in 2016 as hedging contracts unwind and the decline in oil prices seen towards the end of last year feeds through,” IATA said in its Feb-March financial monitor.

This trend is already obvious with exchange rate-adjusted fares falling 6.2% year-on-year in January.

This follows a 4.5% fall in fares in 2015 compared with 2014 (excluding taxes, fees and surcharges of course).

Competitive pressures within the industry will also be a factor in driving airfares down, something airlines are comfortable with because reduced fuel prices more than mitigate the drops.

Indeed, IATA says “the latest financial results have continued to point to a strong end to 2015 for industry profitability.

“Net post-tax profits in our sample from the last quarter of 2015 were almost 60% higher than in the same period in 2014.

“The strongest results were posted by North American airlines, with an aggregate operating margin of just over 15%.

“Financial performance improved in the other regions too except Latin America, where challenging domestic economic conditions continue to take a toll.”

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