Global airline industry's 2018 net profit expected to rise: IATA
- Author: Ronnie Bowen Dec 07, 2017,
Dec 07, 2017, 2:03
Globally, IATA is expecting net profit to rise to hit US$38.4 billion next year, up 11.3% from the US$34.5 billion expected for 2017.
Meanwhile, the number of air passengers will rise from 4.1 billion in 2017 to 4.3 billion next year.
"European airlines are benefiting from a strong economic recovery in home markets, including Russian Federation, a rebound from the terrorism events of 2016, and some consolidation following the failure of several regional airlines", the IATA said.
"Signs pointing to broad-based economic upturn continuing into 2018 is also a good news for air travel demand", he said.
More than 2.7 million people are expected to be employed in the aviation industry in 2018.
The association said worldwide passenger demand rose by 7.3 per cent y-o-y, with airlines in all regions recording traffic growth.
"Demand for air freight grew by 5.9% in October". Airlines are achieving sustainable levels of profitability.
Although operating margin is expected to decline 8.1 percent, net margin is expected to improve by 4.7 percent.
This marked a slowdown from the 9.2 per cent annual growth recorded in September but still exceeded the average annual growth rate of 3.2 per cent over the past decade.
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The growth in passenger numbers for SA (international and domestic) was expected to be between 3% and 4% a year for the next five years, according to projections by Airlines Association of Southern Africa.
In particular, the cyclical rise in the cargo markets has been a boon for Asia Pacific carriers, which account for almost 40 per cent of global cargo capacity.
"Despite the challenges, there is positive momentum heading into 2018". Cargo carried is seen rising to 62.5 million tonnes from 59.9 million tonnes this year.
Fuel - once the biggest expense for airlines - is expected to account for roughly 20 per cent of the industry's costs next year, the report showed.
IATA anticipates jet fuel prices will increase to $73.8 per barrel next year, up 12.5 percent from $65.6 per barrel in 2017.
In the Asia-Pacific region, including India, airlines are expected to register profits of $9 billion in 2018, which would be marginally higher than $ 8.3 billion projected for this year.
Despite rising costs, things are looking up for the airline industry. "There is significant capacity being added within the region but competition on sixth freedom or connecting markets has eased a little with cutbacks in capacity plans from the Gulf", Mr Pearce said.
Domestic demand climbed 7.2% in October compared to October 2016, while capacity rose 6.6%.
Airlines in North America generate almost half of airline revenue across the globe and the largest net profit with $15.6 billion this year. Players that will receive a lift from the more favourable supply environment include AirAsia. De Juniac urged governments to "raise their game" and do more to ensure infrastructure can cope with higher aviation demand.