Global air freight demand remains strong, growth may be ebbing

Global air freight demand remains strong, growth may be ebbing

Global air freight demand remains strong, growth may be ebbing

The industry stands to make US$38.4 billion net profit in 2018, an improvement from the $34.5 billion estimated for 2017 that was revised recently upward from $31.4 billion seen in June this year, according to the International Air Transport Association (IATA).

"As expected, the recent severe weather in the Americas region had only a temporary impact on the healthy travel demand we have seen this year, and we remain on course for another year of above-trend growth", said Alexandre de Juniac, IATA's director general.

All regions are expected to post improved profits year-on-year in 2018 with the North American carriers leading the pack at US$16.4 billion, which is almost half of the collective bottom line.

A rise in overall revenues to $824 billion, up 9.4% on 2017 revenues of $754 billion.

IATA said the forecast increase in passenger fares was in line with expected inflation.

"Demand for air travel remains strong as we head into the holiday travel season and signs point to the broad-based economic upturn continuing into 2018, which is good news", he added.

In its latest forecast, Iata also hoisted its 2017 global profitability forecast for the second time this year. "It's still, however, a tough business and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses", he told a media briefing here today.

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"The fuel bill is expected to be 20.5 per cent of total costs in 2018 [up from 18.8 per cent in 2017]", IATA's chief economist pointed out.

Operationally, the industry is forecast to see 4.3 billion passengers worldwide in 2018, up 6% from 4.1 billion in 2017.

A rise in cargo carried to 62.5 million tonnes, up 4.5% on the 59.9 million tonnes in 2017. The association expects the faster demand growth to push average load factor to a record 81.4%, which it expects to boost yields by 3%. "The demand for air freight grew by 5.9 percent in October".

Iata said the growth of e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018.

Domestic markets have strengthened in China, India and Japan. "This will outpace an expected 3.5 per cent increase in unit revenues", Pearce said.

In a statement today, IATA said, passenger capacity grew by 6.2 per cent and load factor climbed 0.8 percentage point to 80.8 per cent year-on-year (y-o-y). We have a clear strategy that is delivering results on environmental performance.

A slight decline in the operating margin to 8.1%, down from 8.3% in 2017.

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