Airline industry improves outlook, will earn $2.5 billion

Terminal four at JFK airport in New York City

Today the International Air Transport Association forecast that the airline industry will earn $2.5 billion this year, reversing its projection from a few months ago that the industry would lose over $2.5 billion.

Seth Kaplan with Airline Weekly magazine attributes the turnaround to several factors. "You have cheaper oil. You do have an economic recovery going on, some more travel demand. And for U.S. airlines, you also have a stronger U.S. dollar, which is helpful for them on the cost side."

Kaplan also notes the improved forecast is helpful for Americans who wish to travel to Europe. "There's that revenue benefit; if you're a U.S. airline, you're basically getting a little bit of a discount all the way around."

Industry woes and passengers grounded by recession and H1N1 flu made it seem like airlines might go the way of the car industry. But, Kaplan says, "things are much brighter now, with the costs --- especially fuel --- still at manageable levels. Airlines can live with this kind of situation."

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.

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