Finance

U.S. airlines to scoop nearly half of global profit in 2018

U.S. airlines to scoop nearly half of global profit in 2018”

The demand for air cargo is at its strongest level in over a decade. Demand to and from North America fell in year-on-year terms for the seventh consecutive month in September (the most recent month for which route-specific figures are available) and it remains the only worldwide market not to have grown in annual terms this year.

IATA noted that labour costs are now a larger expense item than fuel, comprising 30.9% of costs in 2018. "To continue to deliver on our full potential, governments need to raise their game-implementing global standards on security, finding a reasonable level of taxation, delivering smarter regulation and building the cost-efficient infrastructure to accommodate growing demand", De Juniac added.

That is still US$10b shy of the profit that Apple, as a single company, made for 2016, de Juniac said.

Iata forecast a rise in overall revenues to $824 billion, up 9.4 per cent on 2017 revenues of $754 billion.

IATA predicts unit costs will rise 4.3 percent in 2018, after 1.7 percent in 2017, and it predicts an average jet fuel price of $73.8 per barrel next year, up 12.5 percent.

Passenger numbers are expected to increase to 4.3 billion in 2018.

The biggest challenge to airline profits was still rising costs, specifically oil prices and labour costs.

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Pearce said air travel demand had grown faster than expected, outpacing the supply of new pilots.

Driven by strong trade and tourism, there was lots of competition, he said.

The International Air Transport Association (IATA) announced global passenger traffic results for October showing that demand (measured in revenue passenger kilometres, or RPKs) rose 7.2% compared to the same month a year ago. India will have about 478 million air passengers by 2036.

Strong airline profitability is expected to continue in 2018, according to IATA's latest financial forecast. It now expects profits of US$34.5 billion for this year vis-a-vis the US$31.4 billion announced in June.

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 US airlines awarded high pay increases to pilots this year. Turning to environmental concerns, IATA, which said the inflation-adjusted cost of flying had halved for consumers since 1996, said aviation was committed to managing its carbon footprint with a near-term goal of capping emissions through carbon-neutral growth from 2020.

"And that's why I call it the business of freedom", de Juniac said.



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