The profitability of the global airline industry is expected to rise to US$35.5b in 2019 thanks to a sharp fall in oil prices and solid expectations of global GDP growth, says IATA. The latest projection IATA also delivers good news for investors with a forecast the return on capital will exceed its cost for the fifth consecutive year. And there are welcome tidings for passengers with IATA predicting the 2019 average return airfare before surcharges and tax will be $324, compared to a forecast in June for 2018 fares of $380. The latest profit forecast compares to a revised expected net profit in 2018 of $32.3b. IATA is now expecting an average oil price (Brent) of $65 per barrel compared to $73 per barrel in 2018 thanks to rising US output and inventories. <br/>
general
The new year began on a positive note for domestic airlines as state oil marketing companies slashed aviation turbine fuel price by 14.7%. This is the second consecutive drop in jet fuel price and the sharpest cut since Nov 2008. The revision brings relief to domestic airlines which have been struggling to make profit because of a rise in operating costs. High fuel and depreciating rupee resulted in big losses for the 3 major airlines in the Q2 of FY19. Crude oil prices, however, are on a decline over the last few weeks over concerns of a supply glut. Boeing expects crude price to remain around US$60 per barrel in 2019. Inability to pass on high costs has been another bane for domestic carriers. <br/>