Pacific carriers en route to higher profits in 2018: Iata


Globally, IATA said industry net profit would rise from $34.5bn in 2017 to $38.4bn in 2018 thanks in part to strong demand, efficiency and reduced interest payments.

"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", IATA's CEO, Alexandre de Juniac, 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.

Worldwide passenger demand, measured in revenue passenger kilometers (RPKs), rose 7.3% in October versus the same period a year ago, according to IATA's latest data. It will on Tuesday present its updated economic forecasts for the industry at a media event in Geneva.

Global demand rose 7.2 percent in October, measured against the same month past year, after hurricanes in the Caribbean and southern United States had pegged back demand in September.

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.

That's according to research by IATA, the International Air Transport Association. A strong upcycle in the cargo markets will also support the expected profit improvement next year, it added.

Aside Africa, virtually all the continent's airlines from Asia Pacific, Europe, Middle East, North America and Latin America recorded appreciable traffic growth. That part of the world also "remains the only worldwide market not to have grown in annual terms this year". Capacity climbed 9.1%, and load factor slipped 0.3 percentage points to 82.6%.

At the moment, however, traffic in India is growing at the fastest rate in the world. It is based on data provided by IATA member airlines during October 2017. "Next year, we are expecting Brent crude to be around US$60 and jet fuel to be around US$74 a barrel".

This is especially impressive considering that October was the 38th consecutive month of double-digit passenger percentage growth for India.

The average net profit per departing passenger will also rise slightly to $8.90 next year, from $8.45 in 2017.

"We believe industry profitability is on a more sustained path so even in weakened business conditions we think the industry will perform better than it has in the past because of the (load factor) gap", said Pearce, noting that while low oil prices have contributed, the load factor gap has been above breakeven level since before 2015.