IATA sees better airline profits in 2018 despite rising costs

Global passenger traffic up 7.2pc in Oct: IATA

Net income for 2017 is likely to total $34.5 billion, $3.1 billion higher than forecast in June, the International Air Transport Association said Tuesday in a statement.

Demand, according to IATA has been boosted by very strong growth on the trade lane to and from Asia, which increased by more than 67 per cent in the first nine months of the year.

This was contained in the International Air Transport Association's (IATA). "And tight supply conditions in the fourth quarter should see the air cargo industry deliver its strongest operational and financial performance since the post-global financial crisis in 2010", said Alexandre de Juniac, director general and CEO of IATA. "It's still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses".

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".

But Mr de Juniac pointed out the industry also faces longer-term challenges, many of them are in the hands of governments. "Aviation is the business of freedom and a catalyst for growth and development", he said, adding the industry benefits to the economy include 2.7 million direct jobs and support for 3.5 percent of global economic activity.

The region's carriers face challenges to their business models, Iata said, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the USA, and competition from the new "super connector" [Turkish Airlines].

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Overall revenues are also forecast to climb to $824 billion next year, from $754 billion seen in 2017.

An estimated 4.3bn passengers will travel next year, with air cargo to rise to 62.5m tonnes. De Juniac has said insolvency filings at carriers including Air Berlin Plc and Alitalia SpA reflect over-capacity rather than market weakness.

Latin America: Airlines in Latin America are forecast to generate a $900 million net profit in 2018, up from $700 million in 2017.

European airlines will record a net profit of $11.5 billion next year, according to the forecast. African airlines are projected to lose $100 million.

In 2017, IATA said airlines hit a new record of over 20,000 city-pair connections, up by 1,351 from 2016. More people than ever are travelling. Demand to and from North America fell in year-on-year terms for the seventh consecutive month in September and it remains the only worldwide market not to have grown in annual terms this year.

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