At the same time, the average net margin of IATA’s member airlines over the past four decades was 0.1 per cent, and in the most profitable year in the last decade (2010), it was 3.2 per cent (IATA 2011 : 2). This should be read in the context of the weighted average cost of capital, which is in the range of 7-8 per cent. Clearly, profitability margins in aggregate fall far short of meeting investor (IATA 2011: 14-15; also see WEF 2011:9). By implication there is virtually no short-term liquidity to fund the large-scale investment required for accelerated low-carbon transformation.
The aviation industry involves a public and private supply chain, which includes:
- airlines with varying degrees of public and private ownership;
- manufacturers of aircraft;
- manufacturers of engines;
- airports; and
- air navigation services (ANS) authorities.