The global airlines’ industry is projected to record a higher net profit of $38.4 billion in 2018, primarily bolstered by strong demand, industry grouping IATA said today. The International Airport Transport Association (IATA) said the expected net profit is more than $34.5 billion projected for this year. The figure for 2017 was revised upwards from $31.4 billion forecast in June. Strong demand, efficiency and reduced interest payments would help airlines improve net profitability in 2018 despite rising costs. “2018 is expected to be the fourth consecutive year of sustainable profits with a return on invested capital (9.4 per cent) exceeding the industry’s average cost of capital (7.4 per cent),” IATA said in its ‘State of the Industry and Global Economic Outlook’ report. The report was released at the IATA Global Media Day here. Overall revenues are also forecast to climb to $824 billion next year, from $754 billion seen in 2017.
Reflecting strong demand, the worldwide air passenger numbers are expected to cross 4 billion this year and grow further to 4.3 billion in 2018. “Next year, the average world citizen will travel once every 21 months. Back in 1996, the average citizen flew just once every 50 months and in 2000, every 43 months,” it said. In the Asia-Pacific region, including India, airlines are expected to register profits of $9 billion in 2018, which would be marginally higher than $8.3 billion projected for this year.
“Passenger market conditions vary across the region. Domestic markets have strengthened in China, India and Japan. New low-cost market entrants in the ASEAN (Association of Southeast Asian Nations) region are intensifying competition and contributing to keeping profitability low,” IATA said. India is one of the fastest growing aviation markets in the world, registering high double-digit growth for more than two years. IATA Director General and CEO Alexandre de Juniac said it is good times for the global air transport industry and airlines are achieving sustainable levels of profitability.
“It is still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses,” he said. In 2018, direct employment by the airline industry is forecast to be more than 2.7 million. Further, Juniac said the forecast of record net profit of $38.4 billion for the next year is still USD 10 billion shy of the profit that Apple announced for 2016. “Per passenger, airlines on average will make less than $9 and the net margin of 4.7 per cent is hard won,” he added. IATA represents around 275 airlines comprising 83 per cent of global air traffic.