IATA Sees Higher Airline Revenue and Profits In 2018

Robyn Ryan
December 7, 2017

This was contained in IATA's latest analysis of demand for passenger air transport.

And cargo demand, also a bright spot in 2017 with demand up 9.3 percent after a tough few years, is expected to moderate to 4.5 percent in 2018. "More people than ever are traveling", said IATA's Director General and CEO, Alexandre de Juniac in a statement.

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.

The organisation forecast profit would grow to $600m next year from $300m this year on the back of a minor increase in demand.

Globally, passenger traffic demand rose 7.2 percent compared to the same month a year ago, while capacity grew 6.2 percent and load factor climbed 0.8 percentage points to 80.8 percent. The demand for air cargo is at its strongest level in over a decade. "2018 is expected to be the fourth consecutive year of sustainable profits with a return on invested capital (9.4 per cent) exceeding the industry's average cost of capital (7.4 per cent)", IATA said in its "State of the Industry and Global Economic Outlook" report. "More routes are being opened", he told the IATA global media conference in Geneva, Switzerland.

While IATA expects improved profitability across all regions, North America will continue to lead the way, generating net gains of $16.4 billion. Labour costs are also rising to become a larger expense than fuel, at 30.9 per cent, according to the organisation. "Many of them are in the hands of governments. To continue to deliver on our full potential, governments need to raise their game-implementing global standards on security, finding a reasonable level of taxation, delivering smarter regulation and building the cost-efficient infrastructure to accommodate growing demand", De Juniac added.

Both are expected to further increase in 2018, but at a slower pace, with an estimated 6 percent increase in passengers and 4.5 percent increase in cargo.

"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".

The net profit figure of $38.4 billion next year is an improvement on the $34.5 million expected for 2017, itself an increase from the previous forecast of $31.4 billion.

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