Aviation chiefs upbeat on 2018

Senior airline executives see the continuation of a buoyant profit outlook over the next year based on robust traffic demand.

This view was taken by 87% of chief financial officers and heads of air cargo business who responded to the Airline Business Confidence survey conducted by the International Air Transport Association (IATA) earlier this month.

Some 80% of them see an improvement in year-onyear profitability in the third quarter of 2017, the strongest outcome in a decade, said analysts at the industry group.

On the passenger side, the survey indicates robust demand continued into the second half of the year.

A healthy 86% of respondents experienced an increase in year-on-year demand in the third quarter of 2017, up from 71% in last quarter’s survey.

A total of 71% respondents expect passenger volumes to rise further next year, down from 81% in the last quarter.

However, none of the respondents expect their volumes to decrease over the next 12 months.

For freight, the survey found 58% of respondents — unchanged from last quarter — reported a year-on-year rise in volumes in third quarter.

Only 12% of respondents experienced a decrease in freight volumes, down significantly from 32% last quarter.

Looking ahead, 48% of respondents reported they expect a further increase in freight volumes over the year ahead, down from 58% last quarter.

However, as was the case with the passenger segment, none of the respondents expect their volumes to decrease over the next 12 months, an improvement from 11% last quarter.

A higher share of respondents have seen their input costs increase this quarter compared with the second-quarter survey, driven by gains in the global oil price. Rising oil prices are expected to continue affecting airline costs next year.

Some 40% of respondents expect input costs to increase over the coming 12 months, a sharp turnaround from last quarter where only 19% expected input costs to rise.

Numerous respondents highlighted recent developments in oil prices and the expectation of further price increases to come as a key input for their response.

A modest 20% expect input costs to ease next year, down from 35% in the second quarter, primarily driven by internal productivity gains and cost-cutting programmes.

Matching the rise in input costs, 65% of respondents indicated passenger yields have risen in the quarter, the highest proportion in six years.