Monday, 11 December, 2017

U.S. airlines to scoop nearly half of global profit in 2018

Global passenger traffic up 7.2pc in Oct: IATA Global air travel stays on course for more growth
Howard Terry | 06 December, 2017, 00:14

While airlines in the Middle East are forecast to see net profits improve 100 per cent to $600 million in 2018, up from $300 million in 2017, global aviation industry net profit will rise to $38.4 billion in 2018, an improvement from the revised $34.5 billion expected net profit in 2017, the forecast by the industry's global trade association said.

"Airlines are achieving sustainable levels of profitability".

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.

North American airlines are set for record profit in 2018, thanks in part to European growth. Global air travellers spend about $750bn annually.

IATA represents around 275 airlines comprising 83 per cent of global air traffic.

Worldwide tourists travelling by air are expected to spend more than $750 billion in 2018, a rise of 15% in just over 2 years. "However, given increases in airline input costs, and by contrast to the situation in recent years, we are unlikely to see a boost from to demand from lower airfares", Oxley said.

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.

IATA said the forecast increase in passenger fares was in line with expected inflation.

IATA's statistics show that, when compared to the same month in 2016, passenger traffic in China grew by an impressive 10 percent in October. "It's still, however, a tough business and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses", he told a media briefing here today.

Despite strong cargo demand in October, the IATA report indicates that its growth may have ebbed.

Interestingly, the IATA data hinted at a slowdown from the 9.2 percent annual growth recorded in September 2017.

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.

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

Freight volumes are still expected to grow in 2018, although at a slower pace than in 2017.

"Governments are not meeting their responsibility to provide sufficient infrastructure for the industry to meet demand", de Juniac said.

"Aviation is the business of freedom and a catalyst for growth and development".

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