IATA sees better airline profits in 2018 despite rising costs

Posted December 07, 2017

Passengers have directly contributed to the growth in profit, as the average net profit per departing passenger is expected to rise to $8.90 (up from $8.45 in 2017). While passenger numbers will rise six per cent next year, this year has seen an increase of 7.5 per cent.

"North American airlines have generated more than half of the industry's profits produced in the past three years, but rising cost pressures have slowed further improvements", the report said.

That's according to research by IATA, the International Air Transport Association. 2018 is expected to be the fourth consecutive year of sustainable profits.

"Signs pointing to broad-based economic upturn continuing into 2018 is also a good news for air travel demand", he said.

Despite the rise in passenger and cargo numbers, the rate of growth for both will be lower in 2018 then 2017, IATA said.

North American airlines are once again primed to record the highest profits in the industry. The demand for air cargo is at its strongest level in over a decade.

European airlines generate the second-most revenue when compared by region and made $9.8 billion in net profits this year.

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.

"On the other hand, the airline capacity growth in the other Asean markets is more aggressive, namely Singapore, Vietnam, the Philippines and Brunei".

"Asia-Pacific is leading the way in terms of growth and is clearly the centre of gravity in terms of where the industry is going", said IATA chief economist Brian Pearce, adding that a bigger market size, however, may not necessarily correlate with better profitability. "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 said. Aviation is the business of freedom and a catalyst for growth and development. It is also an announcement of global passenger traffic results for October showing that demand (measured in revenue passenger kilometres or RPKs) rose 7.2 per cent, compared to the same month previous year.