Global passenger traffic up 7.2pc in Oct: IATA

There is lots of competition in New Zealand driven by strong trade and tourism IATA chief economist Brian Pearce says

There is lots of competition in New Zealand driven by strong trade and tourism IATA chief economist Brian Pearce says

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. A strong upcycle in the cargo markets will also support the expected profit improvement next year, it added.

Jet fuel prices are expected to rise even more quickly to $73.8 per barrel (up 12.5 per cent on $65.6 in 2017).

"Despite the challenges, there is positive momentum heading into 2018".

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

The International Air Transport Association (IATA) has cautioned governments across the world about privatising airports to fund growth, a statement that assumes significance as India plans to upgrade and build airports through private sector participation.

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. Capacity climbed 9.1%, and load factor slipped 0.3 percentage points to 82.6%.

Andrew Herdman, director-general of the Association of Asia Pacific Airlines, expects that airfares in Asia, which remain at "very affordable levels", may need to be increased in line with higher oil prices.

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"Overall unit costs are expected to grow by 4.3 per cent in 2018 [a significant acceleration on the 1.7 per cent increase in 2017]".

In terms of revenue per passenger kilometres (RPK), airlines are expected to see a 6% growth in 2018 compared with a 5.7% expected increase in available seat kilometres (ASK).

The forecast growth rates are slower than the 7.5% y-o-y seen in 2017 for passengers and the 9.3% cargo volume growth expected this year.

Passenger demand growth will likely continue in 2018, based on the global economic upturn of recent months, Oxley said. This was down from $1.1bn in 2016. IATA is a trade body that claims to represent more than 80 percent of air traffic.

India is one of the fastest growing aviation markets in the world, registering high double-digit growth for more than two years. "And we will see record load factors in 2018. something like 81.4 per cent".

A slight decline in the operating margin to 8.1%, down from 8.3% in 2017.

"The focus is really on the pressure from cost (increases)", said Pearce. Cargo revenues will continue to do well in 2018, reaching $59.2bn, up 8.6 per cent from expected 2017 revenues of $54.5bn.

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