Think ticket prices for airlines were too expensive during 2014? Well, the average price of airfare is set to fall in 2015, according to the International Air Transport Association. The group estimates that the average return fare for airline passengers is set to drop 5.1 percent next year compared to prices in 2014. But will this decline in airline prices cause more people fly?
Airlines have already been seeing a slight increase in travellers. In fact, the whole reason why airlines will be dropping fares in 2015 is thanks to a steady increase in profits. Of course, this increase in profits is not due so much to an increase in passengers as it is the fall in fuel prices. Either way, airlines are passing the savings on to the travellers.
The IATA says that the global airline industry should earn around $25 billion in profits next year. This is a pretty big improvement over the $19.9 billion it’s expected to make this year. However, it should be noted that this prediction of $19.9 billion is up from the $18 billion that was predicted earlier in the year. The industry has been improving at a rate quicker than anyone could have imagined.
The director of the IATA, Tony Tyler, said that the average profit margin for airlines in 2015 is 3.2 percent. The industry is really improving at a great rate. This is thanks in part to the recovery of the global economy. However, the fall in oil prices has also been a huge help in the closing of 2014. Both of these factors should continue to play a role in earning airlines higher profits in 2015.
This prediction of higher profits is a first for the industry in a long time. In fact, the last time that the industry was predicted to earn near this amount was in 2010. During that year, airlines were expected to make an average profit margin of around 3.1 percent.
Of course, cheap fuel prices are helping all travel industries, not just the airline industry. A fall in petrol prices in the United States led to one of the most travel-heavy Thanksgiving holidays in years. Now airlines in North America are expected to see profit margins jump 6 percent thanks to this fall in gas prices. Hopefully, this trend will keep people travelling throughout the rest of 2014 and well into 2015 and beyond.