Paush - National Upliftment Monthly

Year : 1, Issue : 4 National Upliftment Monthly 27
Najir Husain
Airlines Business is the business
of freedom. The safe and efficient
global movement of goods and people
is a positive force in the aviation
world. Aviation’s success betters
people's lives by creating economic
opportunity and supporting global
understanding. It must stand firm in
the face of any rhetoric that would put
limits on aviation’s future success.
Record profits for airlines means
earning more than the cost of capital.
For most other businesses that would
be considered a normal level of
return to investors. But three years
of sustainable profits is a first for the
airline industry. And after many years
of hard work in restructuring and reengineering
the business the industry
is also more resilient.
The International Air Transport
Association (IATA) announced that
it expects the global airline industry
to make a net profit in 2017 of $29.8
billion. On forecast total revenues
of $736 billion, that represents a
4.1% net profit margin. This will be
the third consecutive year (and the
third year in the industry’s history)
in which airlines will make a return
on invested capital (7.9%) which is
above the weighted average cost of
capital (6.9%).
According to IATA’s Director
General and CEO, Alexandre
de Juniac, Airlines continue to
deliver strong results. This year it's
expected a record net profit of $35.6
billion. Even though conditions
in 2017 will be more difficult with
Airlines
AIRLINES INDUSTRY IN 2017
rising oil prices, it see the industry
earning $29.8 billion. That’s a very
soft landing and safely in profitable
territory. These three years are the
best performance in the industry’s
history—irrespective of the many
uncertainties it face. Indeed, risks are
abundant— political, economic and
security among them. And controlling
costs is still a constant battle in our
hyper-competitive industry.
Despite facing several
constraints, Nepal’s aviation sector,
particularly the international sector,
has been growing at a healthy rate.
Increased movement of migrant
workers in search of job overseas,
tourist inflow as well as large number
of Nepalese students heading abroad
for studies has helped generate the
robust passenger traffic growth over
a decade. The travel demand to Nepal
is likely to continue over the next 20
years, according to a study conducted
by Airbus. In its latest report on Nepal
Air Traffic Analysis, Airbus has said
international passenger traffic in
Nepal is expected to grow at the rate
of 6.4 percent annually over 20 years
(2014-34) due to increased travel
demand in the Middle East, Europe,
Australia, Japan and the US markets.
The Airbus forecast that 50 new
passenger aircraft will be required
to serve the Nepal market by 2024.
The report said that international
passenger traffic had tripled over the
last 10 years.
Foreign carriers connecting Nepal
recorded a double-digit growth. This
marks the 14th consecutive years
of growth for international airlines
since 2003. Currently, more than 25
international airlines connect the
TIA to international destinations.
A majority of these international
airlines operate double daily flights
from Nepal.
As unemployment is a growing
problem in Nepal, the number of
Nepali migrants has been steadily
increasing over the past two decades,
with the largest spike in out migration.
The number has more than doubled in
2016. More than 500,000 youths have
been entering Nepal’s labour market
every year. The growth in migrant
workers movement in fact has
attracted a large number of foreign
carriers to Nepal from the Middle
East. Although, the country is likely
to see less tourist arrivals for at least
two years, migrant workers movement
is likely to jump significantly due to
slower economic growth and less job
opportunities in the country in the
aftermath of the April 25 earthquake.
(The author is executive
Director of Flytech International,
najir786@hotmail.com)