Air fares have fallen by nearly half during the last decade in real terms and margins per passenger are tipped to fall below the price of a glass of wine, says IATA.
Although there’s been outcry about price spikes in this country, the global average return airfare is expected to be USD374 (NZD619) in 2025. This is 40% below 2014 levels adjusting for inflation and currency movements.
. . . Margins
While IATA forecasts a slight recovery in airline profitability, with earnings topping a record USD66 billion, margins remain small. The net margin is expected to reach 3.7%, 0.4 percentage points below the record set in 2023, as airlines will begin to pay the standard level of tax after utilising tax losses incurred during the pandemic. “Although this seems impressive in absolute terms, such a margin is merely half of the average net margin across all global industries,” says IATA. Per passenger profit is USD7.20 (NZD11.90)— under the price of a glass of wine on a night out. Overall passenger yield is expected to fall by 4.0% compared with 2024, IATA economists said at the association’s annual meeting in New Delhi. This was largely reflective of the impact of lower oil prices and strong industry competition.
. . . Boom continues
An IATA survey in Apr supports projections for demand growth. Some 40% of respondents expect to travel more over the next 12 months than they did in the previous 12-month period. The majority (53%) said that they expect to travel as much as they did in the previous year. Just on 47% expect to spend more on travel over the next year. Although 85% expected trade tensions to impact the economy in which they reside and 73% expect to be personally impacted, 50% of those polled expected increased business travel amid trade tensions.
