Home » Aviation » AAPA airlines welcome return to profitability in ’10

MEMBER airlines of the Association of Asia Pacific Airlines (AAPA) posted a record $9.5 billion in net profits in 2010 from a net loss of $1.7 billion of the previous year.

The strong performance was attributed to the resurgence of air freight and air travel demand as well as higher operating efficiencies and load factors.

International cargo traffic, expressed in freight ton kilometers, surged 24% while international passenger traffic, measured in revenue passenger kilometers, grew 9.6% in 2010.

Combined revenues for the carriers reached $147 billion, 30% higher than the $113 billion reported in 2009.

Cargo revenues jumped 52% to $22 billion while passenger revenues rose 26% to $106 billion.

Operating expenses rose 18% to $134 billion, mainly due to a 28% increase in fuel expenses to $43 billion, the airlines’ single biggest cost item. The share of fuel expenditure as a percentage of total operating costs increased 32% in 2010 from 29% in the previous year as oil prices rose 29% to an average of $80 per barrel in 2010. Non-fuel expenditures grew 13% to $91 billion, with overall staff costs rising 12%.

“Buoyed by a firm recovery in premium business travel and a very strong rebound in demand for air freight, Asia Pacific carriers saw a welcome return to profitability in 2010,” AAPA director general Andrew Herdman said.

“Asia-Pacific airlines led the industry recovery, reporting combined net profits of $9.5 billion, reflecting a 6.4% net margin, well above the industry average. At the same time, the region’s carriers are taking on a more active role in international aviation policy debates which will shape the future development of the industry as a key driver of social and economic development,” he added.

AAPA remains positive about medium- and long-term prospects but are wary about the continuing surge in oil prices that could dampen the global economic recovery.

The association is also cautious of the lingering effects of the twin disasters that hit Japan in March despite early signs of recovery in demand for travel to and from the disaster-hit country.

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