Passengers are again packing up their suitcases and flying through the skies en masse, but airline carriers are struggling to lift profits higher.
Air Arabia, based in Sharjah, announced yesterday it served 4.45 million passengers throughout last year, up 10 per cent over 2009.
The airline's expansion plans from last year helped increase the traffic, with new destinations linking Sharjah to places such as Kabul, Afghanistan, and Sohag in Egypt.
The number of passengers Air Arabia carried as a percentage of the seats it had available also climbed, reaching 83 per cent, and up 3 per cent from 2009.
"What we saw in 2010 at Air Arabia was the continued appeal of our low-cost model, here in the UAE and the region," said Adel Ali, the group chief executive of Air Arabia.
But higher fuel prices and pressure on yields pushed the airline's net profit down 31.5 per cent last year compared with 2009, to Dh309.5 million (US$84.2m).
"While we recognise the sector will continue to face challenges in 2011, including likely sustained high fuel prices, we believe if we ensure our value for money product and operational excellence, our financial performance will reflect that commitment over time," Mr Ali said. Air Arabia is not the only carrier with a boost in passenger traffic but a squeeze in profits.
Globally, passenger air traffic jumped 8.2 per cent last year compared with 2009, according to figures released this month by the International Air Transport Association (Iata).
It was an optimistic sign for the international airline industry after a drop-off in passengers for 2009, which ended up being the worst decline in aviation history.
But overall, profit margin for the industry was a "pathetic" 2.7 per cent, said Giovanni Bisignani, the director general and chief executive of the Iata.