Airlines Are Set to Make Even More Money Off Passengers in 2018

Marsha Scott
December 6, 2017

Airlines in Asia-Pacific are expected to see profits rise 8.4% year-on-year (y-o-y) to US$9 billion in 2018 from an expected US$8.3 billion this year as demand growth outpaces capacity increases, says the International Air Transport Association (IATA).

The price of jet fuel is forecast to jump nearly 13 percent, weighing on earnings at carriers with limited hedging, such as those in the US and China.The upgraded estimate for this year is still slightly below 2016's $34.8 billion earnings figure, but the 2018 prediction to $38.4 billion would represent a new industry high as passenger numbers top 4.3 billion.

"As expected, the recent severe weather in the Americas region had only a temporary impact on the healthy travel demand we have seen this year, and we remain on course for another year of above-trend growth", said Alexandre de Juniac, IATA's director general.

The International Air Transport Association (IATA) made the claim in its latest forecast of the global airline industry, published Tuesday.

"Safety performance is solid".

"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.

De Juniac urged governments to "raise their game" and do more to ensure infrastructure can cope with higher aviation demand.

The Iata chief said the industry also faces longer-term challenges. Overall revenues are seen rising 9.4% y-o-y to US$824 billion in 2018.

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

European airlines will record a net profit of $11.5 billion next year, according to the forecast. "And the industry is ready to partner with governments to reinforce the foundations for global connectivity that are vital to modern life", said Mr de Juniac.

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

Middle East airlines, meanwhile, will see net profits doubling to $600 million in 2018, up from the $300 million they will make this year, IATA said.

In 2018, direct employment by the airline industry is forecast to be more than 2.7 million.

Worldwide tourists travelling by air are expected to spend more than $750 billion in 2018, a rise of 15% in just over 2 years. Strong performance of the passenger business is supported by expected robust GDP growth of 3.1 per cent, the strongest since 2010.

This is especially impressive considering that October was the 38th consecutive month of double-digit passenger percentage growth for India.

Other reports by MaliBehiribAe

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