The international market is encountering a steep rise in the fuel price that is directly affecting the profit margins of the other industries. The major airline’s companies will have to slit the profit margin, which was forecasted for 2018 due to the elevating labor costs along with the fuel expense.
The profit margin is cut by 12% by the International Air Transport Association, which has brought down the profit to $33.8 billion or £25.3 billion.
However, as per IATA, along with the aforementioned attributes, the conflicts surrounding the trade and the hiked rates of interest will also affect the profit margin.
2017 has been a smooth year for the airlines with a profit of $38 billion apart from the tax credits. Alexandre de Juniac, the Director General of IATA is hopeful regarding the outcome of the profitability of the airlines. He said that the profit will make its way through the adverse scenarios. As per the speculations, the fuel cost of the airlines will hike by 30%, with a splurge in the oil prices from $54.90 to $70 a barrel. IATA had forecasted the price of oil will touch $60 each barrel. It represents 280 airlines which sum up 83% of the global traffic.
Alexendre de Juniac has also expressed his concern regarding the political turmoil of the world without mentioning the name of any particular country.
He further stated that the numbers of travelers have not declined after the trade war. However, if the scenario continues for a longer period of time, the adverse situation may arise.
With the US and China amidst a rigid war of trades surrounding the tariff and European countries agitated over the US sanctions on the aluminum and steel, the global peace is at risk. This may fuel the arousal of further concerns.
He clearly mentioned the scenario as a bad news from the industrial point of view.