Demand, profits lift airline outlook
These are good times for airlines around the world but it’s still a tough business, the industry’s trade association says.
Airline profits will rise in 2018 as strong demand, better efficiency and lower interest payments offset rising costs, International Air Transport Association (IATA) director-general Alexandre de Juniac said on Tuesday.
‘‘More people than ever are travelling. The demand for air cargo is at its strongest level in over a decade. More routes are being opened,’’ he told the IATA global media conference in Geneva, Switzerland.
This has seen airlines achieve ‘‘sustainable levels of profitability’’, de Juniac said.
Longer-term challenges, that de Juniac blamed on governments, are global security standards, taxation levels, regulation and infrastructure.
‘‘To continue to deliver to our full potential, governments need to raise their game,’’ he said.
Airports also came in for criticism for not investing enough in their infrastructure and processes.
IATA forecast that the global aviation industry’s net profit would rise to US$38.4 billion (NZ$55.7 billion) in 2018, up from 2017’s expected US$34.5b net profit.
That is US$10b shy of the profit that Apple, as a single company, made for 2016, de Juniac said.
Passenger numbers are expected to rise to 4.3 billion, up from 2017’s 4.1 billion.
Cargo carried is seen rising to 62.5 million tonnes from 59.9 million tonnes this year.
Despite the rise in passenger and cargo numbers, the rate of growth for both will be lower in 2018 then 2017, IATA said.
The biggest challenge to airline profits was still rising costs, namely oil prices and labour costs.
Specific information on New Zealand was not provided, with this country grouped in the AsiaPacific region alongside the huge China and India markets.
However, IATA chief economist Brian Pearce said the New Zealand market had performed well. Driven by trade and tourism, there was lots of competition, he said.
IATA represents 281 airlines, which account for 83 per cent of global air traffic.
Its figures show that since 1996, the inflation-adjusted costs of air transport for passengers had halved. In 2018, IATA forecast airline passengers to spend US$861b, or 1 per cent of world gross domestic product, on travel.
More than 2.7 million people are expected to be employed in the aviation industry in 2018. They, and global cargo, will fly on an extra 1000 aircraft by the end of 2018 as the global fleet expands to over 30,000 aircraft, IATA said.
‘‘By bringing together people of different backgrounds and cultures to do business, to learn from one another and to solve problems, aviation provides immense value beyond what can be calculated. And that’s why I call it the business of freedom,’’ de Juniac said.
❚ The writer attended the conference courtesy of IATA and Air New Zealand.