Monday, 19 February, 2018

Global air freight demand up 5.9 percent in October: IATA

An Emirates Boeing 777 and an Airbus A330-300. Iata says airline profits worldwide will hit $38bn next year. Issouf Sanago An Emirates Boeing 777 and an Airbus A330-300. Iata says airline profits worldwide will hit $38bn next year. Issouf Sanago
Patty Aguilar | 06 December, 2017, 00:15

Led by United States airlines, net profits in the aviation industry are set to rise by some 11 percent in 2018, the International Air Transport Association (IATA) said on Tuesday as it presented economic forecasts for the industry.

The bulk of the profit generated next year will come from North America where, according to IATA, airlines in the region are forecast to record a combined net profit of $16.4 billion.

The region's carriers face challenges to their business models, Iata said, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the U.S., and competition from the new "super connector" [Turkish Airlines].

The strong 2018 forecast is fueled by IATA's projection that the number of airline passengers will increase 6% next year to 4.3 billion, helping revenue jump 9.4%, to $824 billion.

Interestingly, the IATA data hinted at a slowdown from the 9.2 percent annual growth recorded in September 2017. Passengers have directly contributed to the growth in profit, as the average net profit per departing passenger is expected to rise to $8.90 (up from $8.45 in 2017).

"Demand for air freight grew by 5.9% in October. And tight supply conditions in the fourth quarter should see the air cargo industry deliver its strongest operational and financial performance since the post-global financial crisis in 2010", said Alexandre de Juniac, director general and CEO of IATA.

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Outbound global traffic continues to uphold growth movement in the sector, but inbound traffic to North America is reportedly being deterred by additional security measures inherent with traveling to the US, IATA noted. Cargo volume is expected to grow 4.5% y-o-y to 62.5 million tonnes.

Europe's airlines are in second place with an anticipated US$11.5 billion in profit, boosted by economic recovery in their home markets as well as some consolidation in that region.

At the moment, however, traffic in India is growing at the fastest rate in the world.

In Europe, capacity increased 4.5pc year-on-year in October, while the overall load factor was 1.3 percentage points higher at 84.9pc. African airlines are projected to lose $100 million.

IATA also expects costs to rise as jet fuel and labor expenditures go up. Demand to and from North America fell in year-on-year terms for the seventh consecutive month in September and it remains the only worldwide market not to have grown in annual terms this year. "This led cargo volume to grow at twice the pace of the expansion in world trade (4.3%)", said IATA.

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