IATA sees better airline profits in 2018 despite rising costs

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Over the a year ago, IATA statistics showed that airlines in India recorded an increase in passenger traffic of just over twenty percent.

Airlines are on course to increase profits again in 2018, a major industry body has said.

Globally, IATA is expecting net profit to rise to hit US$38.4 billion next year, up 11.3% from the US$34.5 billion expected for 2017.

Passenger numbers are expected to rise to 4.3 billion, up from 2017's 4.1 billion.

In the Asia-Pacific region, including India, airlines are expected to register profits of $9 billion in 2018, which would be marginally higher than $ 8.3 billion projected for this year.

Moneycontrol News India's domestic air traffic beat China's growth by double, according to data from the International Air Transport Association (IATA) on Monday. She highlighted examples such as for the last mile for small parcel deliveries, transporting goods to remote or isolated areas and on routes which are not economically viable for larger aircraft.

This has seen airlines achieve "sustainable levels of profitability", de Juniac said.

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.


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

IATA predicts unit costs will rise 4.3 percent in 2018, after 1.7 percent in 2017, and it predicts an average jet fuel price of $73.8 per barrel next year, up 12.5 percent.

Airlines in North America generate almost half of airline revenue across the globe and the largest net profit with $15.6 billion this year.

"The industry also faces longer-term challenges", de Juniac acknowledged. After all, worldwide tourists traveling by air are projected to spend more than $750 billion next year, which marks a 15 percent increase in just over two years.

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

While there will be growth in passenger and cargo demand, Iata's chief economist Brian Pearce warned that intense competition will continue to put pressure on passenger yields.

Although operating margin is expected to decline 8.1 percent, net margin is expected to improve by 4.7 percent. Aviation is the business of freedom and a catalyst for growth and development.

China followed by the USA, will be the largest markets.

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