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News for agents in a ‘good year in a very tough business’

June 11, 2015 Corporate, Headline News No Comments Print Print Email Email

egtmedia59Qantas is launching an IATA New Distribution Capability (NDC) pilot scheme to distribute its Chauffeur Drive first and business class product “in a third party channel environment in cooperation with an Australia-based industry partner”.

The news was announced yesterday by IATA, which said the number of airlines participating in pilots and live deployments to test and evaluate its NDC schemes was growing steadily.

“We welcome the participation of these airlines as well as their travel agent and technology partners in helping to test and implement the NDC Standard,” IATA director general and chief executive, Tony Tyler, told delegates at IATA’s 17th annual general meeting in Miami.http://www.deevanagroup.com/home.html

“NDC will modernise the way that airline products are presented through travel agents as well as help to promote efficiency and innovation. NDC is a pro-consumer move that is unleashing innovation. With NDC, travelers shopping through agencies will be able to compare the full product offering – tailored to their specific requirements.”

IATA also announced the launch of the NDC microsite with information on how to get started with NDC, including links to instructional videos.

MEANWHILE, the outlook for airlines this year is good, overall, and it’s due mainly to increased efficiency, according to IATA.

“We expect the industry as a whole to generate some USD 29.3 billion in net profit this year,” Tyler said in Miami.

“And for the first time in our records (possibly in history) the airline industry as a whole will earn its cost of capital. This is positive news.

“What’s changed the industry’s fortunes? Many assume that the fall in fuel prices was the main driver. Of course it has helped. But the 20% appreciation in the US dollar has moderated this to a very large degree for many airlines. And a significant amount of the fuel spend is hedged at higher than market level.

“The strongest driver of improved profitability is efficiency. This year we expect airlines to fill 80.2% of their seats – a record high load factor that shows how much progress has been made in fine-tuning and focusing the business.

“The second element of the outlook that I must ask your special attention to is the fact that the industry’s performance is far from uniform. Some airlines are doing well. North American carriers are contributing over half of the industry’s profit – about

USD 15.7 billion. But many airlines are still facing huge challenges. Overall, even though USD 29.3 billion may seem like a large number, it is on revenues of USD 727 billion. So it is a hard-earned 4% net profit margin.

“To illustrate even further the contrasting realities, look at what airlines will be making on a per passenger basis which is on average USD 8.27. Some are doing better than that. Those in North America will make more than double that – USD 18.12.

“The Middle East carriers will also do better than the industry average with a per passenger profit of USD 9.30. In contrast, the average European carrier will make USD 6.30 per passenger. In Asia Pacific it is USD 4.24. And for Latin America and Africa it is USD 2.27 and USD 1.59 respectively.

“It is a good year for the industry, running an airline is still a very tough business.”

Edited by Peter Needham

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