Air fares decline in further threat to profit: IATA

Airlines cut domestic fares by an average 23% last month as traffic picked up from April lows, global industry body IATA said on Wednesday, warning that post-coronavirus discounting posed a further threat to profitability. Domestic passenger traffic rose 30% globally in May from a very low base in April, when much of the industry was brought to a near-standstill by the COVID-19 pandemic, IATA said. But the uptick came at the price of fare cuts that airlines can ill afford on top of extra health measures and other new coronavirus-related costs. "Airlines need cash because of the crisis and they're seeking to encourage passengers into seats by offering low fares," IATA Chief Economist Brian Pearce said. "The challenge (is) that unit costs will have been increased by a number of restrictions that have been put in place," he said, predicting "quite a difficult time for airlines" as flights gradually resume. A return to profitability remains a distant prospect for many carriers, and the crisis may cost the industry $314b in lost revenue, IATA predicts.<br/>