Lower airfares not affecting North American airlines’ performance: report

Airfares are falling around the world but that isn’t affecting the financial performance of North America’s airlines, based on a new report by the International Air Transport Association.

Average global airfares fell 4.5 per cent in 2015 when adjusted for the higher U.S. dollar and are likely to still decline this year as fuel hedging contracts unwind, said IATA, the trade association for the world’s airlines.

Airlines are seeing a good enough take advantage of lower fuel prices that they can afford to cut ticket prices without eating into revenues. This is reflected within the strong financial performance of airlines in the fourth quarter of 2015.

Net post-tax profits in IATA’s sample group were up almost 60 per cent compared to a year earlier, led through the North American airlines, which benefit by an aggregate operating margin of 15 percent.

The only region that did not see a noticable difference in financial performance was Latin America, “where challenging domestic economic conditions have taken a toll,” IATA said.

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