The global airline industry is expected to post record profits next year, according to an international trade group that represents the industry. The International Air Transport Association estimates that the world's airlines will make a whopping $25 billion in 2015, up 26 percent from $19.9 billion in 2014.
The reason behind the industry's sudden jump in profits is falling fuel prices. IATA's projections are based on the assumption that the average price of crude oil for the year will be $85 per barrel, the lowest since 2010. (Crude is currently trading at around $60 a barrel; one year ago it was at $95.)
Can passengers expect to share in the industry's good fortune in the form of lower prices? The trade group certainly thinks so: It expects average round-trip fares to fall about 5.1 percent worldwide, after adjusting for inflation, excluding taxes and surcharges. Indeed, some of the world's airlines are taking advantage of the savings to expand their footprint. Turkish Airlines Chairman Hamdi Topçu told Bloomberg News that his airline would increase promotional fares to attract new customers.
But don't expect huge savings, especially if you plan to fly with any of the U.S. carriers. American Express Global Business Travel's forecast for 2015 predicts airfares to rise next year. And Airlines for America, a trade group that represents the American airline industry, told NBC News that the airlines are reinvesting their profits into improving the experience for customers.
“When the price of coffee beans falls, you don’t expect your latte to cost you less,” said Jean Medina, a spokeswoman at Airlines for America. "You expect Starbucks to reinvest in its product and that’s what the airlines are doing.”
Because airlines often purchase fuel in advance, they are only now starting to feel some of the effects of lower fuel prices, said transportation economist George Hoffer. Whether they pass on those savings, however, is unlikely.