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IATA sees better airline profits in 2018 despite rising costs

IATA sees better airline profits in 2018 despite rising costs

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).

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. Labour costs are also rising to become a larger expense than fuel, at 30.9 per cent, according to the organisation. "While restocking cycles are usually short-lived, 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", the association added.

In the three months to June, Singapore Airlines recorded a profit of S$281 million (US$208 million), up S$88 million (US$65 million) from a year before.

"These are good times for the global air transport industry".

IATA said demand to and from North America in particular fell in year-on-year terms for the seventh consecutive month. Capacity grew 9.1 percent, but load factor decreased.3 percent.

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. Cargo volume is expected to grow 4.5% y-o-y to 62.5 million tonnes.

European carriers' October demand climbed 6.2% over October, 2016, which was a slowdown compared to the 7.2% year-over-year growth recorded for September.

Global demand rose 7.2 percent in October, measured against the same month a year ago, after hurricanes in the Caribbean and southern United States had pegged back demand in September.

"Cargo yields are expected to improve by 4% in 2018 (down from the 5% in 2017)". This was down from $1.1bn in 2016.

Projecting these figures into the future, IATA predicted that China will be the largest aviation market in the world by 2025, with the U.S. in second position and India in third. It is based on data provided by IATA member airlines during October 2017. "This will outpace an expected 3.5 per cent increase in unit revenues", Pearce said.

Passenger numbers are expected to increase 6 per cent to 4.3 billion next year, down from 7.5 per cent this year but ahead of the 10-20 year average of 5.5 per cent. "Next year, we are expecting Brent crude to be around US$60 and jet fuel to be around US$74 a barrel".