Hard Brexit a ‘disaster’ for UK-based airlines
Mideast carriers to pilot aviation growth in 2018
dubai — Driven by a predicted two-fold growth in net profit by Middle East carriers, net profits in the global aviation industry are set to surge by some 11 per cent in 2018, the International Air Transport Association (Iata) said on Tuesday.
While airlines in the Middle East are forecast to see net profits improve 100 per cent to $600 million in 2018, up from $300 million in 2017, global aviation industry net profit will rise to $38.4 billion in 2018, an improvement from the revised $34.5 billion expected net profit in 2017, the forecast by the industry’s global trade association said.
“These are good times for the global air transport industry. Safety performance is solid. We have a clear strategy that is delivering results on environmental performance,” said Iata Director General and CEO Alexandre de Juniac.
Strong demand, efficiency and reduced interest payments will help airlines improve net profitability in 2018 despite rising costs, de Juniac said.
In the Middle East, demand is expected to grow by 7.0 per cent in 2018, outpacing announced capacity expansion of 4.9 per cent (the slowest growth since 2002). “The region’s carriers face chal- GENEVA — A hard Brexit would be a “disaster” for UK-based airlines, the head of the International Air Transport Association said on Tuesday.
“If (traffic rights) are not negotiated because it is a hard Brexit it will be a disaster for the UK-based carriers because they will not be allowed to land in Europe, which is a small problem,” Alexandre de Juniac told reporters, although said he didn’t think it would come to that. lenges to their business models, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the US, and competition the new “super connector” (Turkish Airlines). Despite the challenges, there is positive momentum heading into 2018,” said Iata, whose 280 members account for more than three quarters of global air traffic.
“Airlines are achieving sustainable levels of profitability,” he said while highlighting the challenges of rising fuel costs and well as labour and infrastructure expenses.
The Iata chief said the industry also faces longer-term challenges. “Many of them are in the hands of governments. Aviation is the business of freedom and a catalyst for growth and development. 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 costefficient infrastructure to accommodate growing demand,” de Juniac said.
He said the aviation industry benefits to the economy include 2.7 million direct jobs and support for 3.5 per cent of global economic activity.
Iata chief economist Brian Pearce said the outlook “is still bright, bucking a trend to eightyear cycles that would indicate a major downturn was due soon. “We are eight years into this air travel cycle, but we see no reason at present to expect that cyclical pattern to repeat itself,” he said.
After declining for six years in a row, passenger yields, a measure of ticket pricing, are also expected to rise three per cent next year after falling 1.5 per cent in 2017. The increase in fares was in line with expected inflation.
Passenger numbers are expected to increase to 4.3 billion in 2018. Passenger traffic (revenue passenger kilometres or RPKs) is expected to rise six per cent (slightly down on the 7.5 per cent growth of 2017 but still ahead of the average of the past 10-20 years of 5.5 per cent), which will exceed a capacity expansion (available seat kilometers or ASKs) of 5.7 per cent.
Revenues from the passenger business are expected to grow to $581 billion (up 9.2 per cent on $532 billion in 2017). Strong performance of the passenger business is supported by expected robust GDP growth of 3.1 per cent, the strongest since 2010.
The Iata forecast a rise in overall revenues to $824 billion, up 9.4 per cent on 2017 revenues of $754 billion. It also predicted a rise in cargo carried to 62.5 million tonnes (up 4.5 per cent on the 59.9 million tonnes in 2017).
—issacjohn@khaleejtimes.com