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Airline profits set to increase 25% to $25 billion in 2015, IATA says

The world's airlines are expected to rake in $25 billion in profit next year due in large part to cheaper prices for jet fuel, IATA says.

World's airlines are expected to earn more than $7 in profit from every passenger they fly

Airlines over the long term have been some of the most unprofitable industries of all time. But booming demand coupled with cheaper oil will lead to sunnier skies next year, IATA says. (Mark Blinch/Canadian Press)

The world's airlines are expected to rake in $25 billion in profit next year due in large part to cheaper prices for jet fuel, their single biggest expense, the lobby group that monitors the industry says.

The International Air Travel Association said Wednesday it forecasts global profitability to increase by more than a quarter next year. Collectively, the world's airlines are expected to earn about $19.9 billion this year. That's expected to jump to $25 billion next year, as the new normal of cheap fuel sets in and sticks around for a while.

Better still, IATA says airlines will likely to be able to improve their bottom lines while making it cheaper for you to fly. "The airline industry is highly competitive," the group said. "Consumers will benefit substantially from the stronger industry performance as lower industry costs and efficiencies are passed through."

Average return airfares (excluding taxes and surcharges) are expected to fall by 5.1 per cent next year.

Airlines will get a lift from cheaper input costs, but also from an uptick in demand for travel overall because of an improving global economy. IATA, which represents 240 airlines around the world or 84 per cent of global air travel, says passenger miles are expected to increase by seven per cent next year.

Add it all up and the world's airlines are expected to earn about $7.08 in profit per passenger next year. That doesn't sound like much, but it's up from the $6.02 earned in 2014 and more than double the $3.38 earnings per passenger the industry took in last year.

That's a positive sign from an industry that's too often been a laughingstock in terms of its ability to make money. Starbucks, for example, makes about 14 cents profit for every $1 worth of coffee they sell, IATA's CEO Tony Tyler notes.

"If that is the case, they will retain as much from selling seven cups of coffee as an airline will make selling an average ticket," he said.

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