Ris­ing oil costs to get big slice of Asia Pa­cific air­lines’ prof­its

Cebu Daily News - - ENTERPRISE - / I N Q U I RER.NET

AIR­LINES in the Asia Pa­cific will likely see lower prof­its in 2018, join­ing most other air­lines in the world, due to ac­cel­er­at­ing costs, ac­cord­ing to the In­ter­na­tional Air Trans­port As­so­ci­a­tion (IATA).

IATA, the trade group of the world’s air­lines, cut the 2018 profit out­look for Asia Pa­cific car­ri­ers to $8.2 bil­lion from its previous fore­cast of $9 bil­lion. Air­lines in the re­gion re- ported a com­bined profit of $10.1 bil­lion last year, mean­ing this year’s fore­cast rep­re­sented an 18.8 per­cent de­cline.

Air­lines around the world are feel­ing the brunt of higher oil costs, a ma­jor op­er­a­tional expense. IATA said the price of jet fuel was fore­cast to hit $84 per bar­rel this year, up from $66.7 per bar­rel in 2017 and a 60 per­cent in­crease from 2015.

Ac­cord­ing to IATA, car- ri­ers in al­most all other ar­eas in the world, ex­cept for those in the Mid­dle East and Latin Amer­ica, will see prof­itabil­ity fall this year.

Over­all, the profit out­look for car­ri­ers around the world was cut to $33.8 bil­lion down from its $38.4 bil­lion fore­cast re­leased in De­cem­ber 2017.

IATA said the out­look still sig­naled “solid prof­itabil­ity” for 2018, not­ing that in­come at the oper­at­ing level was high when com­pared to past stan­dards.

“Solid prof­itabil­ity is hold­ing up in 2018, de­spite ris­ing costs. The in­dus­try’s fi­nan­cial foun­da­tions are strong with a nine-year run in the black that be­gan in 2010,” Alexan­dre de Ju­niac, IATA’s di­rec­tor gen­eral and CEO, said in a state­ment.

Lo­cal car­ri­ers have also been strug­gling with higher costs.

Philip­pine Air­lines and Cebu Pa­cific Air have pend­ing pe­ti­tions be­fore the Civil Aero­nau­tics Board to pass on part of their fuel costs to cus­tomers via the im­po­si­tion of a fuel sur­charge for cer­tain do­mes­tic and in­ter­na­tional routes.

IATA said pas­sen­ger air travel re­mains poised to grow fur­ther by 7 per­cent in 2018.

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