Air transport net profits to rise 11pc in 2018: IATA

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Global passenger traffic demand, measured in total revenue passenger kilometres, rose by 7.2 per cent in October 2017 compared with the same month a year ago, said the International Air Transport Association (IATA).

Globally, Iata forecasts global industry net profit to rise to $38.4 billion in 2018, an improvement from the $34.5bn expected net profit in 2017, which Iata revised from a $31.4bn forecast in June. Of the $38.4bn, $27.9bn will come from North American and European airlines.

Compared to global worldwide passenger growth of 7.3 percent in October, the Middle East region was underperforming.

The demand mean for global air freight in October slowed from the 9.2 percent annual growth reported in September.

In its statement, IATA said the USA figure, up from a forecast $15.6 billion in 2017, actually represents a slight fall away in market share.

IATA's statistics show that, when compared to the same month in 2016, passenger traffic in China grew by an impressive 10 percent in October. Passenger traffic (revenue passenger kilometers or RPKs) is expected to rise 6.0 per cent (slightly down on the 7.5 per cent growth of 2017 but still ahead of the average of the past 10-20 years of 5.5 per cent), which will exceed a capacity expansion (available seat kilometers or ASKs) of 5.7 per cent.

The heightened expectations are a result of strong demand, efficiency, and reduced interest payments the IATA said.

Iata chief Alexandre de Juniac said: "These are good times for the global air transport industry".

An estimated 4.3bn passengers will travel next year, with air cargo to rise to 62.5m tonnes.

Rising fuel prices have also hit US airlines, but high demand and improving economies in Europe have helped trigger profit in airlines worldwide, an IATA economist told Reuters.

Airlines in all regions recorded growth. As a result, net margin will edge up from 4.6 per cent in 2017 to 4.7 per cent in 2018 despite operating margins being squeezed by increasing costs. African airlines are projected to lose $100 million.

While the momentum may moderate in 2018, e-commerce will likely help underpin global cargo growth.

Iata said passenger numbers are expected to increase to 4.3 billion in 2018.

The Middle Eastern carriers are poised to double profits to US$600 million next year due to a 7 per cent growth in demand and a scaling back of capacity injection.

"Overall unit costs are expected to grow by 4.3 per cent in 2018 [a significant acceleration on the 1.7 per cent increase in 2017]".

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