Pacific carriers en route to higher profits in 2018: Iata

Pacific carriers en route to higher profits in 2018: Iata

Pacific carriers en route to higher profits in 2018: Iata

Although passenger numbers are on the rise, to hit 4.3 billion next year, with passenger business revenues set to grow 9.2 per cent to $581 billion, IATA warned that rising costs overall, notably on higher fuel prices, will pose the biggest challenge to profitability in 2018.

"The region's carriers face challenges to their business models, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the USA, and competition the new "super connector" [Turkish Airlines]", IATA said.

These are good times for airlines around the world but it's still a tough business, the industry's trade association says.

More than 2.7 million people are expected to be employed in the aviation industry in 2018.

Strong demand, efficiency and reduced interest payments would help airlines improve net profitability in 2018 despite rising costs.

The net profit figure of $38.4 billion next year is an improvement on the $34.5 million expected for 2017, itself an increase from the previous forecast of $31.4 billion.

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The report further states that airlines from India have ordered 800 planes, and are looking to add a combined 350-400 aircraft the coming five years.

Andrew Herdman, director-general of the Association of Asia Pacific Airlines, expects that airfares in Asia, which remain at "very affordable levels", may need to be increased in line with higher oil prices.

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.

"Employment is growing. More routes are being opened". Average net profit per passenger is also forecast to rise to $8.90, up from $8.45 in 2017.

This has seen airlines achieve "sustainable levels of profitability", de Juniac said. "Governments are not meeting their responsibility to provide sufficient infrastructure for the industry to meet demand", de Juniac said.

Longer-term challenges, that de Juniac blamed on governments, are global security standards, tax levels, regulation and infrastructure. In September, global passenger demand had increased 6.6 percent from the previous month. Turning to environmental concerns, IATA, which said the inflation-adjusted cost of flying had halved for consumers since 1996, said aviation was committed to managing its carbon footprint with a near-term goal of capping emissions through carbon-neutral growth from 2020.

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