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IATA: With passenger growth will come higher airline profits

06 December, 2017, 00:16 | Author: Priscilla Morrison
  • IATA: With passenger growth will come higher airline profits

The industry stands to make US$38.4 billion net profit in 2018, an improvement from the $34.5 billion estimated for 2017 that was revised recently upward from $31.4 billion seen in June this year, according to the International Air Transport Association (IATA).

The price of jet fuel is forecast to jump nearly 13 percent, weighing on earnings at carriers with limited hedging, such as those in the USA and China.The upgraded estimate for this year is still slightly below 2016's $34.8 billion earnings figure, but the 2018 prediction to $38.4 billion would represent a new industry high as passenger numbers top 4.3 billion.

"These are good times for the global air transport industry", said the IATA's chief executive Alexandre de Juniac. "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.

But Mr de Juniac pointed out the industry also faces longer-term challenges, many of them are in the hands of governments.

He said the aviation industry benefits to the economy include 2.7 million direct jobs and support for 3.5 per cent of global economic activity.

The region's carriers face challenges to their business models, Iata said, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the U.S., and competition from the new "super connector" [Turkish Airlines].




A rise in cargo carried to 62.5 million tonnes, up 4.5% on the 59.9 million tonnes in 2017. "More people than ever are traveling".

In Europe, capacity increased 4.5pc year-on-year in October, while the overall load factor was 1.3 percentage points higher at 84.9pc.

Asia-Pacific: Airlines in this region are forecast to see profits of $9 billion in 2018, up from $8.3 billion in 2017.

In response to the tougher conditions regional carriers have cut costs and unprofitable routes, with Dubai carrier Emirates reporting a 111 per cent increase in profit to $214m in the April 1 to September 30 period after a 75 per cent slump in the first half of its previous fiscal year. The Middle East should see significant gains, with demand far outstripping capacity growth that's set to be the lowest since 2002 as companies such as Qatar Airways respond to sluggish oil-industry demand and the impact of travel restrictions.

Freight volumes are still expected to grow in 2018, although at a slower pace than in 2017. Passengers have directly contributed to the growth in profit, as the average net profit per departing passenger is expected to rise to $8.90 (up from $8.45 in 2017).

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