Air transport net profits to soar in 2018: IATA

Posted December 07, 2017

Global passenger traffic demand grew 7.2 percent in October compared to 2016, according to the International Air Transport Association (IATA).

According to the forecast by the industry's global trade association, combined net profits will hit $38.4bn, from a revised $34.5bn in 2017, with USA carriers weighing in with nearly half.

IATA forecasts global industry net profit to rise to $38.4 billion in 2018, an improvement from the $34.5 billion expected in 2017.

These are good times for airlines around the world but it's still a tough business, the industry's trade association says.

"Safety performance is solid".

"As expected, the recent severe weather in the Americas region had only a temporary impact on the healthy travel demand we have seen this year, and we remain on course for another year of above-trend growth", Alexandre de Juniac, IATA director general and CEO, said. "Airlines are achieving sustainable levels of profitability", added de Juniac, while highlighting the challenges of rising fuel costs and well as labour and infrastructure expenses.

Over the previous year, IATA statistics showed that airlines in India recorded an increase in passenger traffic of just over twenty percent.

In 2018, IATA forecast airline passengers to spend US$861b, or 1 per cent of world GDP, on travel.

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However, IATA said it was not concerned there was a pilot shortage after high-profile cancellations at Ryanair and American Airlines due to rostering issues and after some USA airlines awarded high pay increases to pilots this year. Profits are expected to grow by more than $2 billion in 2018, up to $11.5 billion.

It said domestic demand increased by 7.2 per cent and capacity rose by 6.6 per cent y-o-y, with India and China continuing to lead all markets, recording double-digit growth rates. "More people than ever are travelling [and] the demand for air cargo is at its strongest level in over a decade".

Overall revenues are also forecast to climb to $824 billion next year, from $754 billion seen in 2017.

Aside Africa, virtually all the continent's airlines from Asia Pacific, Europe, Middle East, North America and Latin America recorded appreciable traffic growth. "Governments are not meeting their responsibility to provide sufficient infrastructure for the industry to meet demand", de Juniac said.

"On the other hand, the airline capacity growth in the other Asean markets is more aggressive, namely Singapore, Vietnam, the Philippines and Brunei".

"By bringing together people of different backgrounds and cultures to do business, to learn from one another and to solve problems, aviation provides vast value beyond what can be calculated".

After declining for six years in a row, passenger yields, a measure of ticket pricing, are also expected to rise 3 percent next year after falling 1.5 per cent in 2017.