Sunday, 17 December, 2017

Continued airline growth, profits seen for 2018

IATA Director General Alexandre de Juniac speaks during the Global Media Day in Geneva Global passenger traffic up 7.2pc in Oct: IATA
Dexter Carr | 06 December, 2017, 00:19

Middle East airline's are forecast to see net profits double next year after a significant slump in 2017, 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. Of the $38.4bn, $27.9bn will come from North American and European airlines.

In terms of revenue per passenger kilometres (RPK), airlines are expected to see a 6% growth in 2018 compared with a 5.7% expected increase in available seat kilometres (ASK).

"Recent severe weather in the Americas only had a temporary impact on the healthy travel demand we have seen this year", confirmed International Air Transport Association (IATA) Director General and CEO Alexandre de Juniac, "We remain on course for another year of above-trend growth".

The demand mean for global air freight in October slowed from the 9.2 percent annual growth reported in September. Revenues from the passenger business are forecast to grow to $581bn, up 9.2 per cent on $532bn expected in 2017, according to Iata.

"Demand for air travel remains strong as we head into the holiday travel season, and signs point to the broad-based economic upturn continuing into 2018, which is good news for demand for air travel".

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In line with stronger GDP, the world's airlines are expected to carry 4.3 billion passengers next year, up from a projected 4.1 billion this year.

Airlines in all regions recorded growth.

Africa: African carriers are expected to continue to make small losses of $100 million in 2018 following a collective net loss of $100 million in 2017.

Rising fuel prices have also hit US airlines, but high demand and improving economies in Europe have helped trigger profit in airlines worldwide, an IATA economist told Reuters. Chief marketing officer Kenny Jacobs said the increase in passenger numbers in November was due to lower fares.

All regions are expected to report improved profitability in 2018 and all regions are expected to see demand growth outpace capacity expansion. Cargo revenues will continue to do well in 2018, reaching $59.2bn, up 8.6 per cent from expected 2017 revenues of $54.5bn.

While the momentum may moderate in 2018, e-commerce will likely help underpin global cargo growth.

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