Despite the fact that earlier this year IATA has forecasted the airlines to gain $12.7 billion in profit, it has revised its estimates by almost 8% down to $11.7 billion. According to the updated analysis, the global traffic is forecasted to grow at a 5% a year, down from 5.3% forecasted earlier. The changes made reflect the change in oil demand due to the recent Syrian crisis and the fact, that the industry is recovering at a slower pace than initially expected. Nevertheless, despite some changes in the growth of some of the key markets, the overall performance in 2013 is considerably better than in 2012 and airline performance continues to improve.


North America has shown steady improvement with traffic growth at an average of almost 2% through the first half of 2013, which seem to be largely driven by the impact of a better industry structure. Moreover, consolidation and international joint ventures on major markets are driving efficiency gains. If the merger between American Airlines and US Airways is approved, further capacity rationalization is expected. Consumers are benefitting both from expanded networks with more travel options and from significant investments to improve service levels. Although the recent government shutdown will have its impact on the U.S. economy, the air traffic will most probably not be affected, since passport inspectors, security officers and air traffic controllers have continued to work as usual. Nevertheless, some previous government shutdown experience allows forecasting a decrease in demand.


According to IATA, Europe continues to show one of the weakest performances among the major regions although slowly recovering from the economic crisis, with a forecasted growth in GPD by 1.8% annually during the next 20 years. Slowly improving performance of the airlines is largely being driven by long-haul markets and the aforementioned economic stabilization, contributing to the overall increase in demand. The LCCs have continued to add service in short-haul markets as well. At the same time, increasing airport congestion remains a significant limiting factor for the further development of the industry.



The efficient hubs in the Middle East continue to support its strong performance. The impact of the Syrian crisis has been limited and the market liberalization, resulting in Qatar joining the oneworld alliance as well as other carriers signing codeshare agreements provide a steady growth at average of 13.8% a month. Other strategies include the purchase of equity shares in other airlines, like Etihad investing in airberlin and Jet Airways. Nevertheless, the overall traffic in the region has been decreasing since August 2012.


In such a context the slowdown in the development of the Asia-Pacific is especially noticeable. The growth was mostly supported by the development of low-cost carriers, which continues to reduce fares and open new markets as a result of market liberalization. Thus, we can see such privately-owned carriers as VietJet sign agreements for a provision of 92 Airbus jets. The improved affordability and accessibility of air travel is expected to further stimulate demand and meet travel needs of the rising middle class.


The Latin American and African markets have also continued to show growth with 9.9% and 9.75% of monthly growth respectively from January to July. The performance of Latin America was supported by restructuring and capacity discipline, as well as the growth of LCCs, which account for more than 50% of regions capacity, which is expanding even further through partnerships various partnerships. As for the Africa, the potential growth in air traffic here is still limited due to strict regulatory politics, taxes and insufficient infrastructure.


Overall, the picture of airline performance, as provided by International Air Transport Association surely seems to be largely optimistic, and if the improvement should continue, 2014 could profit more than double compared to 2012.



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