Airline industry profits soar 11 percent in 2017

Dianna Christensen
December 7, 2017

Overall revenues are seen rising 9.4% y-o-y to US$824 billion in 2018.

Capacity grew 6.2% and load factor climbed 0.8 percentage points to 80.8%, which was a record for the month.

"These are good times for the global air transport industry". A strong upcycle in the cargo markets will also support the expected profit improvement next year, it added.

Strong demand, efficiency and reduced interest payments would help airlines improve net profitability in 2018 despite rising costs.

The price of jet fuel is expected to increase 12.5 per cent from $65.6 in 2017 to $73.8 in 2018.

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Despite rising costs, things are looking up for the airline industry. Further, Juniac said the forecast of record net profit of $38.4 billion for the next year is still $10 billion shy of the profit that Apple announced for 2016. Demand to and from North America fell in year-on-year terms for the seventh consecutive month in September (the most recent month for which route-specific figures are available) and it remains the only global market not to have grown in annual terms this year.

Cargo is also forecast to continue its recovery, with growth of 4.5 percent expected over this year's total - 62.5 million tonnes against 2017's 59.9 million tonnes.

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. "This led cargo volume to grow at twice the pace of the expansion in world trade (4.3%)", said IATA. "Governments are not meeting their responsibility to provide sufficient infrastructure for the industry to meet demand", de Juniac said.

He said: "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". Turning to environmental concerns, IATA, which said the inflation-adjusted cost of flying had halved for consumers since 1996, said aviation was committed to managing its carbon footprint with a near-term goal of capping emissions through carbon-neutral growth from 2020.

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

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