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Aviation

IATA worries about civil aviation's low net margins

Meeting in Doha, the International Air and Transport Association (IATA) has provided a forecast of airlines' full-year profits. But while earnings sound impressive, the industry group is concerned about net margins.

IATA said Monday it expected airline companies to log combined bottom-line profits of $18 billion (13.2 billion euros) this year.

At its meeting in Doha, Qatar, the association forecast revenues to reach $746 billion, adding that net margins remained the industry's Achilles' heel.

"It all sounds impressive," IATA Director-General Tony Tyler said in a statement. "But the brutal economic reality is we will earn an average net margin of just 2.4 percent, amounting to less than $6 per passenger."

Ghosts of the past

Some 100 years after the world's first airline passenger took to the skies, the number of clients has risen to over three billion people, but the industry's risks of covering capital costs have not decreased.

At the heart of the problem has been a debate about whether a unique system of ownership controls should finally be relaxed.

The lowdown on high flyers

"We as an industry wish we were treated like any other industry and were able to buy and sell across borders and merge and do business like any other business," Said Tyler.

The background to today's ownership realities lies in decisions taken after the First and Second World Wars, when airspace was deemed sovereign partly due to fears of militarization.

The alternative of treating the skies like the high seas was rejected. As a result, the industry is still ruled by bilateral traffic rights limiting market access, and it's backed by ownership restrictions helping to preserve more than 1,000 airlines.

hg/dr (Reuters, AFP)

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