Published: Wed, December 06, 2017
Global Media | By Abel Hampton

Pacific carriers en route to higher profits in 2018: Iata

Pacific carriers en route to higher profits in 2018: Iata

"To be blunt, we have not seen an airport privatisation that has fully lived up to expectations", said Alexandre de Juniac, director general & CEO at IATA.

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

Latin American airlines had an 8.7% increase in traffic in October, which was a slowdown from September growth of 10.7%, but still the second strongest percentage growth among regions.

The industry will see net profits rising 11.3 per cent to $38.4 billion (Dh141.04 billion) in 2018, marking slight improvement from the $34.5 billion it will make this year (revised up from the $31.4 billion forecast in June).

"Asia-Pacific is leading the way in terms of growth and is clearly the centre of gravity in terms of where the industry is going", said IATA chief economist Brian Pearce, adding that a bigger market size, however, may not necessarily correlate to better profitability.

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.

"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 October, domestic air traffic in India grew by 20.4 percent, while it grew by 10 percent in China, 7.7 percent in Brazil, 6.1 percent in Russian Federation, 5.3 percent in the U.S., 2.8 percent in Australia, and 2.3 percent in Japan.

While the momentum may moderate in 2018, e-commerce will likely help underpin global cargo growth. In 1996, there were fewer than 10,000 city-pair connections, defined as scheduled services with more than one flight per week using aircraft carrying more than 20 seats. IATA is a trade body that claims to represent more than 80 percent of air traffic.

Domestic markets have strengthened in China, India and Japan.

Iata said passenger numbers are expected to increase to 4.3 billion in 2018.

"2018 is expected to be the fourth consecutive year of sustainable profits with a return on invested capital (9.4 per cent) exceeding the industry's average cost of capital (7.4 per cent)", IATA said in its "State of the Industry and Global Economic Outlook" report. We have a clear strategy that is delivering results on environmental performance.

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).

For the first time, more than four billion passengers will be travelling this year, according to the aviation watchdog, and that number is expected to go up to 4.3 billion next year.

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