Airlines are running themselves into the ground

The IATA’s latest report shows the aviation industry is generating returns below the cost of its capital, but airlines continue to add capacity. For Qantas, this means more cost-cutting and no chance of a growth dividend.

The latest International Air Transport Association analysis of the state of the aviation industry highlights what a dysfunctional industry it is and provides context for the ongoing haemorrhaging and continuing shrinking of Qantas’ international business.

IATA expects the industry to make aggregate profits of $US18 billion this year (up from $US10bn last year but slightly down on its March forecast of $US18.7bn). That represents an average return on invested capital of only 5.4 per cent.

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