Confidence among industry heads is slowly improving, as more are expecting profits to improve over the next 12 months, but the momentum in the profitability cycle may be weakening, the International Air Transport Association (IATA) says.
In its Airline Business Confidence Index January 2017 survey, 38.9 per cent of heads of cargo and CFOs said profits had fallen over the past three months but 41.7 per cent predict they will improve over the next 12 months.
According to 51.7 per cent of respondents, cargo demand had improved in the last three months and 55.2 per cent expect it to improve over the coming 12 months despite IATA describing the global trade backdrop as “weak”.
IATA comments: “Industry heads were slightly more optimistic about the outlook for profits over the coming 12 months than they were in October’s survey. But set against a more difficult operating backdrop, the latest survey results continue to indicate that momentum in the profitability cycle has weakened.”
Though yields stabilised, with 50 per cent reporting no change in the last three months, 63 per cent expect no improve over the next 12 months and 29.6 per cent predict a fall.
IATA says: “With the stronger-than-expected 2016 peak season boosting demand on certain routes, 18 per cent of respondents reported an annual increase in freight yields in Q4 2016 – the highest share in two years. But ongoing concerns about future growth in industry-wide capacity continue to weigh on expectations for cargo yields.”