Global air travel stays on course for more growth

Javier Stokes
December 6, 2017

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. The inventory-to-sales ratio in the United States is looking sideways, thereby indicating that the period when companies look to restock inventories quickly-which often gives air cargo a boost-has ended.

"It is still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses", he said. Despite the challenges, the aviation body said there is positive momentum heading into 2018.

That's according to research by IATA, the International Air Transport Association.

"2018 is expected to be the fourth consecutive year of sustainable profits with a return on invested capital (9.4 per cent) exceeding the industry's average cost of capital (7.4 per cent)", IATA said in its "State of the Industry and Global Economic Outlook" report.

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But he said that Pyongyang's actions had made America's alliances with Japan and South Korea "stronger than ever". China and Russian Federation objected to that idea in the latest United Nations sanctions resolution.

European carriers' October demand climbed 6.2% over October, 2016, which was a slowdown compared to the 7.2% year-over-year growth recorded for September.

Asia-Pacific was the growth leader in October, with passenger traffic growth of 10.3pc. Volumes are expected to grow by 4.5 per cent in 2018, down from the 9.3 per cent growth of 2017.

Total capacity climbed by six per cent in the global passenger market segment, while load factor increased one percentage point to 79.4 per cent y-o-y, it said. Cargo yields are expected to improve by 4 per cent in 2018, slower than the 5 per cent in 2017. This was down from $1.1bn in 2016. "Since average consumer prices across the world have more than doubled, this represents a halving in the real or inflation-adjusted cost of air transport", said Pearce.

Global trade has also helped cargo operators, with an estimated 62.5 million tons of freight to be carried in 2018, constituting an increase of 4.5 percent from the 2017 forecast. India and China continued to lead all markets, with double-digit growth rates. Meanwhile, airlines in the Asia-Pacific region witnessed an increase in freight volumes by 4.4 percent, and the capacity expanded by 3.9 percent in October 2017, compared to the same period past year. Cargo revenues will continue to do well in 2018, reaching $59.2bn, up 8.6 per cent from expected 2017 revenues of $54.5bn. This is despite an expected decline in operating margin to 8.1 per cent, down from 8.3 per cent.

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