Middle East airlines will see net profits doubling to $600 million in 2018, up from the $300 million they made in 2017, according to IATA.
Led by U.S. airlines, net profits in the aviation industry are set to rise by some 11 percent in 2018, the International Air Transport Association (IATA) said on Tuesday as it presented economic forecasts for the industry.
The price of jet fuel is forecast to jump nearly 13 percent, weighing on earnings at carriers with limited hedging, such as those in the US and China.The upgraded estimate for this year is still slightly below 2016's $34.8 billion earnings figure, but the 2018 prediction to $38.4 billion would represent a new industry high as passenger numbers top 4.3 billion.
"These are good times for the global air transport industry", IATA Chief Executive Officer Alexandre de Juniac said in the release.
He cautioned that the $38.4 billion the entire global airline industry would make next year is still $10 billion shy of the profit that Apple - a single company - announced for 2016.More news: Russia's service sector revving up as business activity accelerates
Latin America: Airlines in Latin America are forecast to generate a $900 million net profit in 2018, up from $700 million in 2017.
Asia-Pacific: Airlines in this region are forecast to see profits of $9 billion in 2018, up from $8.3 billion in 2017. As a result, operating margins will decline from 8.3% this year to 8.1%, according to the forecast.
While cargo demand remains strong, several indicators show that we may have passed the growth peak. This will push up the average load factor to a record 81.4 per cent, helping to drive a 3 per cent improvement in yields.
Over the a year ago, IATA statistics showed that airlines in India recorded an increase in passenger traffic of just over twenty percent.
The International Air Transport Association (IATA) has cautioned governments across the world about privatising airports to fund growth, a statement that assumes significance as India plans to upgrade and build airports through private sector participation.More news: Lamborghini aims to release hybrid super cars
Worldwide tourists travelling by air are expected to spend more than $750 billion in 2018, a rise of 15% in just over 2 years. The demand for air cargo is at its strongest level in over a decade.
IATA said the biggest challenge to profitability in 2018 would be rising costs linked to the higher oil prices and other factors.
The upward cost pressure from fuel prices is in tandem with rising charges by airline industry suppliers and new infrastructure costs that are contributing to an expected slowdown in capacity increases in 2018, he added.
IATA noted that labour costs are now a larger expense item than fuel, comprising 30.9% of costs in 2018.More news: These Are The Finalists For The 2017 Heisman Trophy