Airline Industry Faces Profitability Challenges Despite Growth Potential
The global airline industry, marred by a skewed value chain and legacy policies, struggles to achieve sustainable profitability. Despite its rapid growth, the Indian aviation market highlights challenges faced by airlines, such as oligopolistic pricing and intense competition. Efforts to balance this value chain could set a global example.
- Country:
- India
The international airline industry is grappling with profitability challenges, with historical profit margins rarely exceeding five percent, as highlighted by IATA's Chief Economist, Marie Owens Thomsen.
Thomsen, speaking in India's national capital, noted that the skewed value chain, resulting from legacy policies, squeezes airlines between oligopolistic suppliers and competitive fare pricing.
Highlighting the Indian aviation sector's rapid growth, Thomsen emphasized that successful efforts to equilibrate the value chain in India could provide a model for global emulation. IATA projects a net profit of USD 36 billion with a profit margin of 3.7 percent by 2025.
(With inputs from agencies.)
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