While the U.S. passenger carriers steadies after domestic economic sluggishness, several Gulf-based

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The outlook for the global airline industry remains strong for the near future. Although opryland hotel nashville air travel demand for the rest of the year is expected to be soft owing to weakness in certain emerging economies and a tepid cargo market in the Asia-pacific region, the next year looks promising on the expected consistency in economic recovery and improved business and consumer confidence.
The International Air Transport Association (IATA) projects overall airline profits of $11.7 billion for 2013, with 3.12 billion passengers in total. The current forecast opryland hotel nashville marks almost an 8% reduction from the previous projection of $12.7 billion. Net profit margin is expected opryland hotel nashville at 1.65%, down from 1.8% estimated opryland hotel nashville previously. However, profitability is expected to increase to $16.4 billion in 2014 backed by a passenger count of 3.30 billion. Net profit margin is expected to grow 2.2% in 2014.
North America: opryland hotel nashville With the world s largest economy improving, the outlook for North American airlines looks brighter for the rest of the year. Consolidation benefits, disciplined capacity, growing travel demand and a number of new and enhanced ancillary revenues also provide an impetus.
The carriers are performing impressively in terms of customer service with on-time arrivals, fewer customer complaints, lower cancellations, launch of newer routes and overbooked flights. As a result, these carriers are expected to generate $4.9 billion in profits in 2013, and $6.3 billion in 2014.
Asia-Pacific: These carriers opryland hotel nashville are expected to post profits of $3.1 billion in 2013, much less than $4.0 billion recorded in 2012. A sluggish regional opryland hotel nashville cargo market and softer air travel demand are primarily responsible for the poor showing. This will be partially offset by the strengthening of China s domestic market and growth of long haul markets owing to upbeat trade flows and business activities. The lingering tepidness of the region s cargo market will have an impact on 2014 profits, which are only expected to increase to $3.6 billion.
Middle East: Per IATA, profits from the Middle East carriers are expected to grow from $1 billion in 2012 to $1.6 billion in 2013 and $2.1 billion in 2014. Cost control measures, joint ventures and product innovations will drive the profitability. The region will likely witness strong traffic growth owing to solid growth in non-oil producing sectors in Saudi Arabia and UAE.
Latin America: The region opryland hotel nashville is expected to swing back to profit, generating an income of $600 million against the $200 million loss suffered in 2012.Profits will further improve to $1.1 billion in 2014. Growing demand and capacity expansion stemming from increased trading and business flows with Asia and North America will likely offset opryland hotel nashville the sluggishness in the domestic scenario.
Europe: As for the European airlines, the IATA expects this year s profit to reach $1.7 billion versus $400 million in 2012. Modest economic recovery, improving consumer confidence and increased manufacturing and export activity would drive traffic demand and support the profit surge. The growth is expected to continue next year, with the regions opryland hotel nashville carrier accumulating a profit of $3.1 billion.
Africa: African air carriers this year are expected to face the same fate as last year, suffering a loss of $100 million, and will remain the same in the following year. Over the last few quarters, this territory has attracted opryland hotel nashville immense attention owing to the untapped business opportunities it offers. However, the opportunities have not yet materialized into any substantial profitability.
While the U.S. passenger carriers steadies after domestic economic sluggishness, opryland hotel nashville several Gulf-based airlines continue to fortify their positions within the global airline industry. Emirates has led the pack by expanding in Europe, Africa and the BRICS thus making Dubai one of the largest international connecting hubs in the world. Emirates' success was followed by the formation of two other Gulf airline superpowers, Etihad Airlines and Qatar Airways, which are trying to emulate their size and stature.
The large scale plane orders only confirm the long-term ambitions of these airlines. The three Middle Eastern carriers already have a much impressive fleet of wide-bodied jets as compared to U.S. carriers. Further, the Gulf giants have placed a staggering order worth $162 billion with The Boeing Company ( BA - Analyst Report ) and Airbus, deliveries of which are expected over the next decade.
Emergence of these cash-rich airline companies remains a concern for the legacy carriers including the U.S. ones, which might lose a chunk of their international market as more passengers continue to move through the Gulf.
Passenger Cargo: Solid air travel demand, stability in emerging markets and economic recovery in Europe and North America would drive growth. The IATA suggests enhanced partnership between carrier and freight forwarder for recovery from the prolonged slump. The IATA projects global airline passenger growth of 5.0%, while cargo business will see an expansion of 3.7%. The average industry load factor is expected at a record level of 80.7%.
Coming to demand-supply balances, demand (measured in traffic) is expected to outpace capacity in 2014. While the projected capacity increase is 5.0%, air travel demand will likely see a 5.8% pickup, resulting in a marginal reduction of 0.5% in passenger yield in 2014.
Fuel Price Effect: Airline profit outlook depends on fuel prices, the major variable component in the industry. For 2014, average oil prices opryland hotel nashville are expected to stay at $105 per barrel, lower than $111.8 per barrel in 2012 and around $109 in 2013 primarily due to stability in oil producing countries and increased fuel supply opryland hotel nashville in North America. Lower fuel prices no doubt cut airlines operating expenses, but it also indicates a slowing economy and the consequent fall in global air travel opryland hotel nashville demand.
However, despite a soft macroeconomic outlook, if pricing remains stable the carriers will likely experience better profitability. The Association projects fuel cost of $215 billion in 2014, accounting opryland hotel nashville for 30% of the overall operating cost.
Service and Fleet Restructuring: Air carriers at large are scrapping flights in many small and unprofitable airports in order to reduce their cost burden that has increased opryland hotel nashville 55% over the period 2006 2013. The companies continue to replace old and depleted airplanes with new and upgraded opryland hotel nashville ones. Though initially expensive, new and improved aircraft are more fuel efficient than the existing ones and will help in lowering opryland hotel nashville operating and maintenance costs.
Over the next 20 years, global airlines are expected to invest in excess of $4 to $5 trillion in fleet development. Apart from the high demand from the oil rich Gulf nations, a major part of the fleet demand will also be driven by China and the continuous expansion of low-budget carriers around opryland hotel nashville the world. For this, the airlines are banking on top aircraft manufacturers such as Boeing, Embraer SA ( ERJ - Analyst Report ) and Airbus.
Over the long run, the carriers aim to replace their old narrow-body jets A320 s/B757-200/300 with advanced narrow-body airplanes such as A-321, A320 Neo and the B737 Max, for better service opryland hotel nashville and demand-supply equilibrium.
In October, Delta Air Lines Inc. ( DAL - Analyst Report ) has announced its plan to purchase 40 new jets from European aircraft manufacturer Airbus in a deal worth $5.6 billion. Delta has ordered 10 A330-300 wide body jets and 30 narrow body A321 aircraft to be delivered between 2015 and 2017. Four A330 will be delivered in 2015, with four more scheduled for the coming years and the remaining two for 2017.
In October, JetBlue Airways Corporation ( JBLU - Analyst Report ) entered into an agreement with Airbus to purchase 15 new A321 ceo and 20 new A321 neo aircraft. opryland hotel nashville The carrier has also opted to upgrade the existing order of 8 new A320 ceo and 10 new A320 neo with 8 new A320 ceo and 10 new A321 neo.
Jet Renovation: With passengers demanding comfort and quality service along with proper security, airlines are focusing on aircraft redesigning with new and attractive products and services within the travel plan.
United Continental ( UAL - Analyst Report ) is offering premium flat-bed cabin seats on every transcontinental flight between New York s John F. Kennedy International Airport and San Francisco/Los Angeles. Further, the aircraft will have 42 Economy Plus seats with additional legroom. This is in addition to flat-bed seats and personal on-demand opryland hotel nashville entertainment system for its premium cabin passengers of long-route international flights. This will also provide flyers an added level of privacy and comfort along with multi-course meals and complementary wine plus personal staff attention.
Dallas, Texas-based Southwest Airlines ( LUV - Analyst Report ) has upgraded 89 of its 737-700 fleet with the new Boeing Sky Interior, and renovating in-flight cabins and decorating interiors (known as Evolve) to improve customer satisfaction and experience.
Hedging Strategies: Hedging strategies are used by airline companies to cope with the rising fuel prices. The carriers use a combination of calls, swaps and collars at varying WTI crude-equivalent price levels to hedge.
opryland hotel nashville The U.S. airline industry is expected to remain profitable over the next two decades given the improving worldwide aviation trend. However, growth opryland hotel nashville may be held back until 2015 due to volatility in fuel prices and economic softness in the U.S. and Europe.
Although U.S. airlines experienced sluggish growth over the last few months, the demand for air travel is expected to nearly double over the next 20 years, as predicted by the U.S. Federal Aviation Administration (FAA). Passenger enplanements are expected to grow 2.8% to 757.2 million in 2014 and about 2.1% in the fut