IATA Sees Higher Airline Revenue and Profits In 2018

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Overall profits for global airlines are set to rise 11 percent to $38.4 billion in 2018, with $27.9 billion coming from North American and European airlines, according to new figures released by International Air Transport Association (IATA).

"As expected, the recent severe weather in the Americas region had only a temporary impact on the healthy travel demand we have seen this year, and we remain on course for another year of above-trend growth", said Iata CEO Alexandre de Juniac.

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

A boom in traveller numbers has already led to this year's projected net profit being revised up, after it was forecast at $31.4bn in June.

The association expects oil prices to average $60 for a barrel of Brent Crude - a rise of 10.7 per cent on this year, taking oil-related costs up from 18.8 per cent to 20.5 per cent. Accelarating labour costs will see wages take a 30.9 per cent chunk. meanwhile. next year.

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

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"It's still, however, a tough business, and we are being challenged on the cost front by rising fuel, labor and infrastructure expenses".

That's ahead of 7.7 percent in Brazil, 6.1 percent in Russian Federation and 5.3 percent in the USA.

However, IATA said it was not concerned there was a pilot shortage after high-profile cancellations at Ryanair and American Airlines due to rostering issues and after some USA airlines awarded high pay increases to pilots this year.

With the exception of Singapore Airlines (SIA) - which has hedged 47 per cent of its fuel needs up till FY22-23 - most other South-east Asian carriers have limited or no fuel hedging, she went on to highlight.

Performance for individual markets in South-east Asia will also vary, Ms Png added. "The region's carriers face challenges to their business models, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the USA, and competition the new "super connector" (Turkish Airlines)". Players that will receive a lift from the more favourable supply environment include AirAsia. It is based on data provided by IATA member airlines during October 2017.

In particular, South-east Asian carriers are facing fierce competition on long-haul routes to North America and Europe, from the Gulf trio and the key Chinese carriers.