Airlines project higher earnings

Airlines project higher earnings

The world’s airlines have revised their 2016 profit forecast up nearly 9 percent.

That was the message from the International Air Transport Association, the trade group that revised its annual profit forecast last week to $39.4 billion, up from the forecast in December of $36.3 billion. That equates to a 5.6 percent profit margin on revenue of $709 billion.

The trade group attributed the higher profit forecast to lower fuel costs, a strong revenue stream from passenger fees, improved efficiency and record rates of filled seats.

The strongest financial performance is expected from North American carriers, which are forecast to generate $22.9 billion of this year’s profit.

But in his profit forecast, Tony Tyler, CEO of IATA, bemoaned that the industry’s profit margin still falls short of some other industries.

For every $100 in sales, Starbucks earns about $11, he said, while the airline industry only earns $5.60.

“We don’t begrudge Starbucks their profitability,” Tyler said. “But there is clearly still upside for airline profits.”

More guests are booking directly

Hotel giant Hilton Worldwide, along with other major hotel brands, has been trying to persuade travelers to book directly through their booking system, instead of making reservations through an online travel site.

As an incentive, Hilton has offered perks such as free wireless internet.

The effort has paid off, according to Hilton Chief Executive Christopher Nassetta, who told industry analysts last week that since the direct-booking campaign was launched in February, enrollment in Hilton’s rewards program has jumped almost 90 percent. To get the free perks, guests must book directly and enroll in the rewards program.

“The business we received through Web direct is higher than it’s ever been and is growing faster than ever,” Nassetta said, adding that the percentage of bookings made through the hotel website is growing five times faster than the rate for bookings through third-party travel websites.

Hotels prefer that guests book directly through their websites because it means they avoid paying a 15 to 25 percent commission charged for bookings through the third-party sites, such as Expedia.com and Booking.com.

But online travel agents say travelers can more easily compare rates by using online sites. Online travel agents “not only provide consumers the opportunity to shop across brands but users can find independent or boutique hotels that they may not have found otherwise,” said Steve Shur, president of the Travel Technology Association, a group that represents online travel agents.

Geography quiz

Q. The city of Pasco is located on the Columbia River not far from the Ice Harbor Dam in which state?

A. Washington. In 1805, the Lewis and Clark Expedition camped near where the town of about 70,000 residents now exists. With the cities of Kennewick and Richland, it makes up what is known as the Tri-Cities.

Combined dispatches