Airline industry profits soar 11 percent in 2017

The International Air Transport Association (IATA) announced global passenger traffic results for October showing that demand (measured in revenue passenger kilometres, or RPKs) rose 7.2% compared to the same month past year.

Regionally, North American airlines should perform best in 2018, and are forecast to generate net profits of $16.4 billion (up from $15.6 billion in 2017).

Airline profits will rise in 2018 as strong demand, improved efficiency and lower interest payments offset rising costs, IATA (International Air Transport Association) director general Alexandre de Juniac said on 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 for demand for air travel", said De Juniac. "It's still, however, a tough business and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses", he told a media briefing here yesterday.

Capacity increased 6.2 percent, and load factor increased 0.8 percent.

Operationally, the industry is forecast to see 4.3 billion passengers worldwide in 2018, up 6% from 4.1 billion in 2017.

Passenger numbers are expected to rise to 4.3 billion, up from 2017's 4.1 billion.

However, IATA said it was not concerned there was a pilot shortage after high-profile cancellations at Ryanair and American Airlines due to rostering issues and after some USA airlines awarded high pay increases to pilots this year.

Global trade has also helped cargo operators, with an estimated 62.5 million tons of freight to be carried in 2018, constituting an increase of 4.5 percent from the 2017 forecast.

Airlines in North America generate almost half of airline revenue across the globe and the largest net profit with $15.6 billion this year.

Aside Africa, virtually all the continent's airlines from Asia Pacific, Europe, Middle East, North America and Latin America recorded appreciable traffic growth. Profits are expected to grow by more than $2 billion in 2018, up to $11.5 billion.

Passenger demand next year is forecast to grow 7.0 per cent, amid the slowest announced capacity expansion seen since 2002 at 4.9 per cent. "More people than ever are travelling [and] the demand for air cargo is at its strongest level in over a decade".

"On the other hand, the airline capacity growth in the other Asean markets is more aggressive, namely Singapore, Vietnam, the Philippines and Brunei".

"The industry also faces longer-term challenges", de Juniac acknowledged.

  • David Armstrong