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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/03/airlines-warned-profits-will-halve.jpg"><img class="alignnone size-full" title="Airlines are set to see their profits hit by ongoing turmoil in the Middle East" src="http://londonglossy.com/wp-content/uploads/2011/03/min-airlines-warned-profits-will-halve.jpg" alt="Airlines are set to see their profits hit by ongoing turmoil in the Middle East"/></a></p>
<p>Airlines will see their combined profits nearly halve this year, an industry trade body has warned, as political unrest in the Middle East ramps up oil prices.</p>
<p>The airline industry will generate net profits of 8.6 billion US dollars (£5.2 billion) in 2011, a 46% decline on last year, the International Air Transport Association (Iata) estimated. It previously forecast net profits of 9.1 billion US dollars (£5.5 billion) for this year.</p>
<p>Iata said the turmoil sweeping across North Africa and the Middle East, most recently in Libya, prompted the downgrade, as the cost of Brent crude oil has surged past the body&#8217;s predicted 2011 average of 84 US dollars per barrel to 116 US dollars.</p>
<p>The warning came as Libyan leader Muammar Gaddafi remained defiant in the face of increased violence between rebels and loyalists. Much of the fighting has taken place near some of the country&#8217;s largest oil terminals, such as Marsa el-Brega, in the east of the country.</p>
<p>Giovanni Bisignani, Iata chief executive, said improved forecasts of global economic growth &#8211; estimated to be 3.1% in 2011 &#8211; would only partially offset the rising oil costs.</p>
<p>He said: &#8220;The oil price rise is based on political fears with the Middle East unrest. If the price rises to levels that stall economic growth, the impact will be severe.&#8221;</p>
<p>Iata has now raised its 2011 average oil price to 96 US dollars per barrel for Brent crude and said oil costs are expected to be 20% higher in 2011, compared to the previous year. Fuel is now estimated to represent 29% of total operating costs for airlines, up from 26% in 2010, Iata said.</p>
<p>On a positive note, the association significantly upgraded its profit forecast for European carriers from 100 million US dollars (£61.4 million) to 500 million US dollars (£307 million). However, this is still lower than the 1.4 billion US dollars made in 2010.</p>
<p>Mr Bisignani said taxation was a second major risk to the industry, and singled out the UK&#8217;s recent hike in Air Passenger Duty.</p>
<p>He said: &#8220;This is a price sensitive business. Adding taxes, which in some cases are 3% to 5% of the cost of a ticket on top of the rise in oil prices, is also a big risk.&#8221;</p>
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