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IATA: With passenger growth will come higher airline profits
06 December 2017, 12:34 | Sammy Green
Global passenger traffic up 7.2pc in Oct: IATA
Overall profit is expected to rise 11% to $38.4bn in 2018, and the outlook is encouraging, IATA said on Tuesday as it raised its 2017 forecast to $34.5bn, up from an earlier $31.4bn estimate, but still lower than 2016. The demand for air cargo is at its strongest level in over a decade.
IATA also expects costs to rise as jet fuel and labor expenditures go up. "While restocking cycles are usually short-lived, the growth of e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018", the association added.
Latin America: Airlines in Latin America are forecast to generate a $900 million net profit in 2018, up from $700 million in 2017.
In its latest forecast, Iata also hoisted its 2017 global profitability forecast for the second time this year.
Worldwide passenger demand, measured in revenue passenger kilometers (RPKs), rose 7.3% in October versus the same period past year, according to IATA's latest data.
Asia-Pacific was the growth leader in October, with passenger traffic growth of 10.3pc. Cargo volume is expected to grow 4.5% y-o-y to 62.5 million tonnes. That part of the world also "remains the only global market not to have grown in annual terms this year". This will push up the average load factor to a record 81.4 per cent, helping to drive a 3 per cent improvement in yields.
In 2017, IATA said airlines hit a new record of over 20,000 city-pair connections, up by 1,351 from 2016. In September, worldwide passenger demand had increased 6.6 percent from the previous month.
While the total number of reported incidents past year actually fell by nearly 10 percent to 9,837, the portion that were deemed a higher risk increased from 2015.
The figures accounts for 190 of the world's airlines so "are likely to significantly underestimate the extent of the problem", IATA's assistant director for external affairs Tim Colehan said in Geneva.
"The focus is really on the pressure from cost (increases)", said Pearce.
Capacity increased 4.5% and load factor rose 1.3 percentage points to 84.9%, highest among regions.
Oil prices are expected to average $60 a barrel for Brent Crude in 2018, up 10.7 per cent from $54.2 per barrel in 2017, according to IATA. While passenger numbers will rise six per cent next year, this year has seen an increase of 7.5 per cent. Revenues from the passenger business are forecast to grow to $581bn, up 9.2 per cent on $532bn expected in 2017, according to Iata.
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