Airline profits will rise to $38.4 billion in 2018, while cargo volume growth will return to a normal pace after booming in 2017, the International Air Transport Association (IATA) forecasts.
Net profits will rise from the $34.5 billion expected to be seen in 2017, which has been revised from $31.4 billion in IATA’s June forecast, with strong demand, efficiency and reduced interest payments likely to improve airline net profits in 2018 despite rising costs.
Cargo continues to benefit from a strong cyclical upturn in volumes, with expected growth of 4.5 per cent in 2018, down from 9.3 per cent in 2017, and cargo revenue is predicted to increase 8.6 per cent in 2018 to $59.2 billion.
Volumes in 2017 were helped by companies needing to restock inventories quickly to meet unexpectedly strong demand, resulting in cargo volumes growing at twice the pace of the expansion in world trade, which was 4.3 per cent.
Cargo yields are expected to improve by four per cent in 2018, slower than the five per cent improvement in 2017, and IATA adds though restocking cycles are usually short-lived, the growth in e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018.
IATA director general and chief executive officer, Alexandre de Juniac says these are good times for the global air transport industry, saying: “The demand for air cargo is at its strongest level in over a decade. Employment is growing. More routes are being opened. Airlines are achieving sustainable levels of profitability.”
“It’s still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses.”
All regions are expected to report improved profitability in 2018 and demand growth is predicted to outpace capacity expansion.
North America is expected to lead the way, accounting for nearly half the industry’s total profits, generating $16.4 billion in 2018.
Asia Pacific is forecast to see profits of $9 billion, Europe to deliver $11.5 billion, Latin America generate $900 million, the Middle East to see $600 million and Africa is expected to make a loss of $100 million, to follow the $100 million loss predicted in 2017.