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

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

The bulk of the profit generated next year will come from North America where, according to IATA, airlines in the region are forecast to record a combined net profit of $16.4 billion.

Latin American passenger traffic showed an 8.7% rise during the month, slowing from 10.7% in September; IATA said global passenger volumes for the region's airlines have struggled to recover from the impacts of the September hurricanes.

A hard Brexit would be a "disaster" for UK-based airlines, the head of the International Air Transport Association said on Tuesday.

The positive outlook is the result of solid airline safety performance; a clear strategy that is delivering results on environmental performance; more people than ever are traveling; demand for air cargo is at its strongest level in over a decade; employment is growing; and more routes are being opened. "And tightening 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 rebound in 2010", said Alexandre de Juniac, IATA's Director General and CEO. "Airlines are achieving sustainable levels of profitability", added de Juniac, while highlighting the challenges of rising fuel costs and well as labour and infrastructure expenses.

He said the aviation industry benefits to the economy include 2.7 million direct jobs and support for 3.5 per cent of global economic activity. Overall revenues are seen rising 9.4% y-o-y to US$824 billion in 2018. A rise in cargo carried to 62.5 million tonnes (up 4.5 per cent on the 59.9 million tonnes in 2017).

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The forecast exceeds IATA's expectation of $34.5 billion for 2017 net profit.

After declining for six years in a row, passenger yields, a measure of ticket pricing, are also expected to rise by 3% next year, after falling 1.5% in 2017.

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

Africa is set to remain the only unprofitable region, IATA predicts, with airlines suffering a collective $100 million loss in 2018, similar to this year.

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. "However, given increases in airline input costs, and by contrast to the situation in recent years, we are unlikely to see a boost from to demand from lower airfares", Oxley said. That marked the 15th consecutive month with capacity gains.