IATA: Growth to slow in 2019 as world trade weakens

IATA director general and CEO, Alexandre de Juniac

Demand growth is expected to slow in 2019 due to weaker world trade conditions, with tonnage predicted to increase 3.7%, the International Air Transport Association (IATA) says.

The association is predicting that, following an increase of 4.1% in 2018, growth will slow to 3.7 per cent to 65.9 million tonnes, the slowest pace since 2016.

Cargo yields are expected to grow 2%, well below the “exceptional” 10% growth in 2018.

IATA says this continues to recent strengthening of the cargo business since cost increases are lower.

Overall cargo revenues are expected to reach $116.1 billion in 2019, up from $109.8 billion in 2018.

IATA director general and CEO, Alexandre de Juniac says: “We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile.”

The association forecasts that global airline net profits will be $35.5 billion in 2019, up from $32.3 billion in 2018, making 2019 the tenth year of profit and fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital.