IATA sees better airline profits in 2018 despite rising costs

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The number of incidents involving disorderly passengers has risen in recent years, with IATA saying in the past that airlines are increasingly having to navigate local laws to bring prosecutions for offenses and crews have to be trained on how to handle violence.

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

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

FUELLED by a rebound in the cargo market and strong passenger demand, Asia Pacific airlines are expected to rake in profits to the tune of US$9 billion in 2018, up from an expected bottom line of US$8.3 billion for 2017.

All regions are expected to post improved profits year-on-year in 2018 with the North American carriers leading the pack at US$16.4 billion, which is almost half of the collective bottom line.

"Demand for air travel remains strong as we head into the holiday travel season and signs point to the broad-based economic upturn continuing into 2018, which is good news", he added.




A rise in cargo carried to 62.5 million tonnes, up 4.5% on the 59.9 million tonnes in 2017.

Iata said the growth of e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018.

Unique city pairs served by airlines grew to over 20,000 in 2017, +1,351 on 2016 and double the 10,000 city pairs served in 1996.

Over the same period, airline service costs for consumers have fallen from US$0.86 per one tonne kilometre to US$0.80, a 7% decline over two decades according to IATA.

Projecting these figures into the future, IATA predicted that China will be the largest aviation market in the world by 2025, with the United States of America in second position and India in third. Chief marketing officer Kenny Jacobs said the increase in passenger numbers in November was due to lower fares. With oil prices trending higher, jet fuel prices are expected to rise by 12.5 per cent to US$73.8 per barrel next year.

That said, IATA expects passenger load factor to remain comfortably above the breakeven point for airlines globally going into 2018, despite earnings before interest and tax (EBIT) coming under pressure from higher costs. We have a clear strategy that is delivering results on environmental performance. As a result, net margin will edge up from 4.6 per cent in 2017 to 4.7 per cent in 2018 despite operating margins being squeezed by increasing costs.

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