Growth and robust global travel demand lifts airlines

Side view of Lufthansa cargo plane

Globally, passenger traffic demand rose 7.2 percent compared to the same month previous year, while capacity grew 6.2 percent and load factor climbed 0.8 percentage points to 80.8 percent.

According to the forecast by the industry's global trade association, combined net profits will hit $38.4 billion, from a revised $34.5 billion in 2017, with USA carriers weighing in with nearly half.

The number of incidents involving disorderly passengers has risen in recent years, with IATA saying in the past that airlines are increasingly having to navigate local laws to bring prosecutions for offenses and crews have to be trained on how to handle violence.

In its latest forecast, Iata also hoisted its 2017 global profitability forecast for the second time this year.

The positive outlook is the result of solid airline safety performance; a clear strategy that is delivering results on environmental performance; more people than ever are traveling; demand for air cargo is at its strongest level in over a decade; employment is growing; and more routes are being opened.

IATA director-general and chief executive officer Alexandre de Juniac said airlines are achieving sustainable levels of profitability, but challenges remain.

"The benefits of aviation are compelling - 2.7 million direct jobs and critical support for 3.5% of global economic activity".

The region's carriers face challenges to their business models, Iata said, and from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the USA, and competition from the new "super connector" [Turkish Airlines]. The increase in fares was in line with expected inflation. Overall revenues are seen rising 9.4% y-o-y to US$824 billion in 2018.

An estimated 4.3bn passengers will travel next year, with air cargo to rise to 62.5m tonnes. Passenger traffic (revenue passenger kilometers or RPKs) is expected to rise 6 per cent (slightly down on the 7.5 per cent growth of 2017 but still ahead of the average of the past 10 to 20 years of 5.5 per cent), which will exceed a capacity expansion of 5.7 per cent. De Juniac has said insolvency filings at carriers including Air Berlin Plc and Alitalia SpA reflect over-capacity rather than market weakness.

Iata said passenger numbers are expected to increase to 4.3 billion in 2018. Demand to and from North America fell in year-on-year terms for the seventh consecutive month in September and it remains the only worldwide market not to have grown in annual terms this year. Further, Juniac said the forecast of record net profit of $38.4 billion for the next year is still $10 billion shy of the profit that Apple announced for 2016.

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