Airlines Are Set to Make Even More Money Off Passengers in 2018

Dec 07, 2017, 02:04
Airlines Are Set to Make Even More Money Off Passengers in 2018

The growth in passenger numbers for SA (international and domestic) was expected to be between 3% and 4% a year for the next five years, according to projections by Airlines Association of Southern Africa. While passenger numbers will rise six per cent next year, this year has seen an increase of 7.5 per cent. "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 U.S., and competition the new "super connector" (Turkish Airlines)".

"These are good times for the global air transport industry".

The net profit figure of $38.4 billion next year is an improvement on the $34.5 million expected for 2017, itself an increase from the previous forecast of $31.4 billion.

The organisation forecast profit would grow to $600m next year from $300m this year on the back of a minor increase in demand.

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Andrew Herdman, director-general of the Association of Asia Pacific Airlines, expects that airfares in Asia, which remain at "very affordable levels", may need to be increased in line with higher oil prices.

"Employment is growing. More routes are being opened".

This has seen airlines achieve "sustainable levels of profitability", de Juniac said.

IATA noted that labour costs are now a larger expense item than fuel, comprising 30.9% of costs in 2018.

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While there will be growth in passenger and cargo demand, Iata's chief economist Brian Pearce warned that intense competition will continue to put pressure on passenger yields. De Juniac urged governments to "raise their game" and do more to ensure infrastructure can cope with higher aviation demand.

Longer-term challenges, that de Juniac blamed on governments, are global security standards, tax levels, regulation and infrastructure.

He said the benefits of aviation are compelling, with the industry supporting 2.7 million direct jobs and providing support for 3.5 percent of global economic activity. "While restocking cycles are usually short-lived, 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", it added. It is also an announcement of global passenger traffic results for October showing that demand (measured in revenue passenger kilometres or RPKs) rose 7.2 per cent, compared to the same month past year.

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