Global airlines' industry profit to hit $38.4b in 2018: IATA

06 December, 2017, 00:17 | Author: Ora Austin
  • Global passenger traffic up 7.2pc in Oct: IATA

Compared to global worldwide passenger growth of 7.3 percent in October, the Middle East region was underperforming.

Revenues from the passenger business are expected to grow to $581 billion (up 9.2 per cent on $532 billion in 2017).

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.

According to the forecast by the industry's global trade association, combined net profits will hit $38.4 billion, from a revised $34.5 billion in 2017, with United States carriers weighing in with nearly half. Cargo revenues will continue to do well in 2018, reaching $59.2bn, up 8.6 per cent from expected 2017 revenues of $54.5bn.

In its statement, IATA said the US figure, up from a forecast $15.6 billion in 2017, actually represents a slight fall away in market share.

In October, domestic air traffic in India grew by 20.4 percent, while it grew by 10 percent in China, 7.7 percent in Brazil, 6.1 percent in Russian Federation, 5.3 percent in the USA, 2.8 percent in Australia, and 2.3 percent in Japan.

IATA director-general and chief executive officer Alexandre de Juniac said airlines are achieving sustainable levels of profitability, but challenges remain.

An estimated 4.3bn passengers will travel next year, with air cargo to rise to 62.5m tonnes.

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An improvement in net margin to 4.7%, up from 4.6% in 2017.

At the moment, however, traffic in India is growing at the fastest rate in the world.

Over the same period, airline service costs for consumers have fallen from US$0.86 per one tonne kilometre to US$0.80, a 7% decline over two decades according to IATA.

Meanwhile, Pearce told theedgemarkets.com that competition remains intense in Southeast Asia, which generally depresses profitability.

China followed by the USA, will be the largest markets.

Iata said passenger numbers are expected to increase to 4.3 billion in 2018. "Next year, we are expecting Brent crude to be around US$60 and jet fuel to be around US$74 a barrel". Passenger traffic (revenue passenger kilometers or RPKs) is expected to rise 6 per cent (slightly down on the 7.5 per cent growth of 2017 but still ahead of the average of the past 10 to 20 years of 5.5 per cent), which will exceed a capacity expansion of 5.7 per cent.

The upward cost pressure from fuel prices is in tandem with rising charges by airline industry suppliers and new infrastructure costs that are contributing to an expected slowdown in capacity increases in 2018, he added. We have a clear strategy that is delivering results on environmental performance.

For the first time, more than four billion passengers will be travelling this year, according to the aviation watchdog, and that number is expected to go up to 4.3 billion next year.

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