According to a forecast by IdeaWorksCompany, passenger fees and other so-called ancillary revenues are expected to represent 6% of all revenues for airlines worldwide in 2013, with frequent-flier programs accounting for 60% of all ancillary revenues. "These fees have become, for many airlines, the difference between a profit and a loss, and that is not lost on airline executives all over the world," said Jay Sorensen, president of IdeaWorksCompany.
Spending on business travel is predicted to rise by 5.1% this year, according to the Global Business Travel Association. "While there are still many factors that could hamper the economy again, from the impact of sequestration to rising energy prices, business travel spending is heading in the right direction so far in 2013," said Michael McCormick, executive director of the association.
Despite a slow start, 2013 is expected to be another huge year for industry mergers and acquisitions, according to a DeSilva & Phillips forecast. Companies such as Google are flush with cash, and the M&As are seen as a way to open up new, efficient revenue streams. "With expectations for a slow-growth economy, strategic buyers will pursue acquisitions for new revenue streams to achieve corporate growth objectives. Financial firms that raised substantial sums during the past five years will need to put the capital to work," says DeSilva & Phillips Managing Director John Kaiser.
The International Air Transport Association forecasts 4.5% growth in global airlines' passenger traffic for 2013. "2013 will not be a banner year for profitability, but we should see some improvement on 2012," IATA CEO Tony Tyler said in a statement.
A global trade group now says the world's airlines should earn a collective profit of $2.5 billion this year, reversing earlier predictions of a $2.8 billion loss. Traffic growth should hit 7.1% for the year, while cargo shipments should grow 18.5%, according to the new forecast. Even so, the association warned that the economic recovery remains fragile and noted that European airlines, beset by labor troubles and volcanic eruptions, will miss out on much of the improved outlook.