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Airlines Set to Pull in Record $39 Billion in Profit This Year

SmarterTravel

Yep, that’s “billion” with a ‘b’.

The International Air Transport Association (IATA), the trade group for the world’s airlines, estimates that global profit for 2016 will be $39.4 billion this year, a nine percent increase over 2015.

“It seems that we are living in extraordinary financial times,” said IATA director-general Alexandre de Juniac. He also noted that 60 percent of those profits came from U.S. carriers.

For a historical comparison, the LA Times reports the industry only had a $5 billion profit in 2006, just 10 years ago.

According to de Juniac, lower fuel costs and strong consumer demand are the main factors behind this surge in profits. At the same time, those same factors—particularly fuel prices—could bring that profit number back to earth. “We are having a very good year,” de Juniac said. “I am not predicting an end to the good times, but it would be unrealistic to expect them to last forever.”

Air Travel Weekly writes that, according to IATA chief economist Brian Pearce, passenger growth will likely be slower next year. Pearce added that the recent “one-off” drop in oil prices resulted in savings that were mostly passed on to customers, but that an all-around lackluster economy “could put more pressure on travel demand.”

OK, great, but what does that mean for you? On the plus side, airlines have been investing in their product, adding features like free in-flight entertainment like Delta and American, for example. Delta has also thrown money into reducing delayed baggage. All of this equals an improving experience for you, the traveler, even as airfares stay on the lower side.

Of course, if profits weaken, airlines will look for ways to protect their position. And according to the LA Times, “Airline critics, including passenger advocates, say airlines have not set aside enough of their earnings to lower fares and increase legroom for economy travelers.”

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