IATA says Middle East airline net profit will double in 2018

Aaron Brown
December 6, 2017

Middle East carriers recorded a 6.9 percent rise in demand in October year on year, up from 3.9 percent in September, said the International Air Transport Authority (IATA) in its monthly report released Monday. Of the $38.4bn, $27.9bn will come from North American and European airlines.

Iata Chief Economist Brian Pearce said the outlook "s still bright, bucking a trend to eight-year 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".

IATA has estimated 2018 airline capacity growth to be 3.4 percent for North America, just shy of the region's forecast traffic growth of 3.5 percent. Revenues from the passenger business are forecast to grow to $581bn, up 9.2 per cent on $532bn expected in 2017, according to Iata.

"Demand for air freight grew by 5.9% in October".

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. Total capacity climbed 6%, and load factor increased 1.percentage point to 80, which was a record for the month.

Outbound worldwide traffic continues to uphold growth movement in the sector, but inbound traffic to North America is reportedly being deterred by additional security measures inherent with traveling to the US, IATA noted.

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A rise in cargo carried to 62.5 million tonnes, up 4.5% on the 59.9 million tonnes in 2017.

For the first time, more than four billion passengers will be travelling this year, according to the aviation watchdog, and that number is expected to go up to 4.3 billion next year.

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. "However, given increases in airline input costs, and by contrast to the situation in recent years, we are unlikely to see a boost from to demand from lower airfares", Oxley said.

"Overall unit costs are expected to grow by 4.3 per cent in 2018 [a significant acceleration on the 1.7 per cent increase in 2017]".

Rising fuel prices have also hit US airlines, but high demand and improving economies in Europe have helped trigger profit in airlines worldwide, an IATA economist told Reuters. While momentum is easing after a period of restocking, the development of e-commerce should mean that growth rates remain ahead of the pace of expansion in world trade.

Other reports by Free-Prsite

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