IATA chief describes Safi ban as "absurd"

Tyler said that Safi – now operating out of Dubai – met all international safety standards and was IOSA certified. “They say the issue is oversight and yet it is ok for European carriers to fly in. If it is not safe, it is not safe for all airlines. I think it is time for the European Union to think again.

Tyler also criticised the whole concept of the EU blacklist. “There is no transparency and no international standard. The whole ban list is not helpful for safety, Airlines don’t know why they are on the banned list – and they don’t know how to get off it. That is simply wrong.”

IATA is working with African airlines to help them achieve IOSA standards by 2015.

Meanwhile, in his opening address, Tyler said IATA had upgraded its global outlook for the airline industry to a $12.7 billion profit in 2013 on $711 billion in revenues.

This latest forecast is $2.1 billion better than the $10.6 billion profit projected in March of this year and an improvement on the $7.6 billion profit generated in 2012.

Margins remain weak, Tyler said. On revenues that are expected to total $711 billion this year, the net profit margin is expected to be 1.8%. Indicative of the characteristically razor thin profits of the airline industry, even this small margin will make 2013 the third strongest year for airlines since the events of 2001. In 2007 the industry earned 2.9% net profit margin ($14.7 billion) and in 2010 airlines generated a 3.3% net profit margin ($19.2 billion).

“This is a very tough business. The day-to-day challenges of keeping revenues ahead of costs remain monumental. Many airlines are struggling. On average airlines will earn about $4 for every passenger carried - less than the cost of a sandwich in most places,” Tyler said.

Profitability is thin, but there is a solid performance improvement story over the last seven to eight years. More efficient use of assets is the main contributor. The industry load factor is expected to average a record high of 80.3% in 2013—6.0 percentage points above 2006 levels. Additionally, airlines have found new sources of value that have increased the contribution of ancillary revenues from 0.5% in 2007 to over 5% in 2013.

Middle East carriers are expected to show a profit of $1.5 billion, slightly improved from the previous projection of $1.4 billion. Passenger demand is expected to continue apace at 15.0%, well ahead of the anticipated 12.6% capacity expansion. The region’s successful hubs continue to connect long-haul traffic, with particular strength in facilitating connectivity to emerging economies in Asia and Africa.

Macro-economic factors have also contributed. Oil prices are expected to average $108/barrel (Brent), a little below the $111.8 average for 2012, in part due to increasing supply from North America. Meanwhile, the outlook for global economic growth has deteriorated slightly since March as the recession in Europe proves to be deeper than expected. The beneficial impact of lower fuel prices is expected to offset the adverse effect of weaker economic growth, providing a moderate boost to industry profitability.

“Generating even small profits with oil prices at $108/barrel and a weak economic outlook is a major achievement. Improved performance is what’s keeping airlines in the black. Airlines are putting more people in seats. For the first time in history, the industry load factor is expected to average above 80% for the year. And with ancillary revenues topping 5%, it is clear that airlines have found new ways to add value to the travel experience and to shore-up the bottom line,” said Tyler.

A total of 3.13 billion passengers are expected in 2013—the first time in history that passenger numbers rise above the 3 billion mark.