IATA says airlines are on the up

Airlines are faring better financially this year.  So says IATA the international global body which looks after International air transport.  Share prices and fares are up, despite the volcanic ash that caused hardship in April, global airlines body IATA said.

In its latest financial snapshot, the International Air Transport Association have announced strong operating profits reported by major U.S. airlines in the first quarter which bodes well for the rest of the industry. "Positive Q1 operating profits in the U.S. is a good sign for the expected improvement in airline financial performance during 2010," the Geneva-based group said.

IATA, whose 230 airline members include British Airways, Lufthansa, Singapore Airlines and Air France, estimated the six-day shutdown of much of European airspace last month cost carriers $1.7 billion in lost revenues. It announced on Monday, markets were now keen on the sector, whose performance tends to be cyclically tied with the broad economy which is rebounding from a financial crisis. "Even after Iceland's volcanic ash plume airline share prices stood 15 percent up so far this year, compared to a 6 percent rise in the FTSE Global All Cap Index. Financial markets remain bullish over future airline financial performance,"  IATA assessmnt is that  demand for international air freight and passenger travel accelerated in March, but would dip in April because of the volcanic disruption.

Its latest Financial Health Monitor said passenger travel was up at a healthy annualised rate of 9 percent in the first quarter, with air freight volumes expanding at a 26 percent rate. Air fares, a key driver of airline income, have also risen significantly on a seasonally adjusted basis, IATA said. "Tighter supply-demand conditions, as load factors rise, have pulled average fares (and cargo rates) up," it said. "Average economy fares are now 10 percent above their lows, while premium fares have risen 15 percent. However, both are only half-way to regaining the levels achieved in early 2008."

With airlines in the aftermath of the Volcanic disruption refusing to spot rate and selling at anywhere between Tariff and the Iata issued rates it will be interesting to see how much damage the disruption actually caused.