Airline profits to plummet next year, according to industry group's forecast Though they have continued to raise fares and fees, airline carriers are experiencing heightened demand. An industry group representing carriers said airlines will likely log bigger profits this year, but future growth prospects are bleak as the government mulls levying higher taxes on air travel.

The International Air Transport Association affirmed global demand for air travel is at exceedingly high, far surpassing average levels. The elevated demand comes at a time of depressed economic activity, surprising analysts.

Nonetheless, the group asserted the number of people traveling by air – whether for leisure or business reasons – will likely fall by the end of the year, spurred by the ongoing sovereign-debt crisis in Europe coupled with persistent joblessness and a tepid economic climate in the U.S.

The association represents roughly 50 percent of the world's airlines, and projected combined 2011 profit for its members to total $6.9 billion. That figure represents a significant uptick from the group's June forecast, which pegged profits at $4 billion, according to The New York Times.

Still, in March, the group said total profits this year would hit $8.6 billion. Analysts assert the fluctuation in forecasts is a result of volatile economic conditions. The March projections arrived prior to the 9.0-magnitude earthquake and subsequent tsunami that brought the Japanese economy to a standstill, and before the wave of revolutions in North Africa and the Middle East sent oil prices soaring.

The group also contended fewer airline passengers over the coming months would likely erode airlines' profit margins next year. Business cost reductions will be difficult to achieve during such an economic climate, experts say, and it is likely airlines will suffer as a result.

"Airlines are going to make a little more money in 2011 than we thought. That is good news," International Air Transport Association director Tony Tyler asserted. "Given the strong headwinds of high oil prices and economic uncertainty, remaining in the black is a great achievement. Even with the extra shocks this year, people are still flying."

Amid the global economic slowdown, the association said collective airline profits in 2012 would likely fall to $4.9 billion, according to The Wall Street Journal.

In 2010, carriers earned nearly $16 billion in profits. Airlines have historically struggled to augment their profit margins, as oil costs often erode cash stockpiles. The industry is susceptible to economic shocks, and is often one of the first to feel the effects of a slowdown in growth, experts say.

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