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The airline industry is on course for record profit in 2018

06 December 2017

"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 United States, and competition the new "super connector" [Turkish Airlines]", IATA said.

Similarly, net profit is poised to rise nearly 20 per cent in 2018 to US$38.4 billion - the industry's highest amount ever in one year.

The organisation forecast profit would grow to $600m next year from $300m this year on the back of a minor increase in demand. De Juniac has said insolvency filings at carriers including Air Berlin Plc and Alitalia SpA reflect over-capacity rather than market weakness.

The value of goods carried by airlines is expected to exceed $6.2 trillion in 2018, representing 7.4% of world GDP.

Despite burgeoning costs, the International Air Transport Association (Iata) projects that the world's airlines will clock a record profit of US$38.4 billion in 2018, thanks to healthy demand, greater efficiency and reduced interest payments on debt.

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

Global tourists travelling by air are expected to spend more than $750 billion in 2018, a rise of 15% in just over 2 years.

Middle East airlines, meanwhile, will see net profits doubling to $600 million in 2018, up from the $300 million they will make this year, IATA said. Worldwide capacity is up 6.4% for the year so far, and the global passenger load factor is up one point YOY to 81.6%. Capacity grew 9.1 percent, but load factor decreased.3 percent. This is despite an expected decline in operating margin to 8.1 per cent, down from 8.3 per cent. A strong upcycle in the cargo markets will also support the expected profit improvement next year, it added. "Airlines are achieving sustainable levels of profitability", said Mr de Juniac. Volumes are expected to grow by 4.5 per cent in 2018, down from the 9.3 per cent growth of 2017.

"Strong growth expected next year for commercial aviation", said Brain Pearce, IATA's chief economist.

Oil prices are expected to average $60 a barrel for Brent Crude in 2018, up 10.7 per cent from $54.2 per barrel in 2017, according to IATA. "To continue to deliver on our full potential, governments need to raise their game - implementing global standards on security, finding a reasonable level of taxation, delivering smarter regulation and building the cost-efficient infrastructure to accommodate growing demand", he said.

The airline industry is on course for record profit in 2018