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IATA: Global passenger demand rebounded in October

06 December 2017
IATA: Global passenger demand rebounded in October

FUELLED by a rebound in the cargo market and strong passenger demand, Asia Pacific airlines are expected to rake in profits to the tune of US$9 billion in 2018, up from an expected bottom line of US$8.3 billion for 2017. The inventory-to-sales ratio in the U.S. is looking sideways, thereby indicating that the period when companies look to restock inventories quickly-which often gives air cargo a boost-has ended. Labour costs are also rising to become a larger expense than fuel, at 30.9 per cent, according to the organisation.

Latin America: Airlines in Latin America are forecast to generate a $900 million net profit in 2018, up from $700 million in 2017.

"These are good times for the global air transport industry, Mr de Juniac added".

Worldwide passenger demand, measured in revenue passenger kilometers (RPKs), rose 7.3% in October versus the same period past year, according to IATA's latest data.

European carriers' October demand climbed 6.2% over October, 2016, which was a slowdown compared to the 7.2% year-over-year growth recorded for September. 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%.

Asia-Pacific airlines had the highest traffic growth compared to 2016 at 10.3 percent.

Freight volumes are still expected to grow in 2018, although at a slower pace than in 2017. Worldwide traffic for North American carriers grew 3.7% during the month (compared to 3% in September) as global capacity in the region grew 5.2%, causing the region's global load factor to slide 1.1 points YOY to 79.2%.

The figures accounts for 190 of the world's airlines so "are likely to significantly underestimate the extent of the problem", IATA's assistant director for external affairs Tim Colehan said in Geneva. IATA is a trade body that claims to represent more than 80 percent of air traffic. The highest growing domestic markets were India, at 20.4 percent, and China, at 10 percent. Cargo revenues will continue to do well in 2018, reaching $59.2bn, up 8.6 per cent from expected 2017 revenues of $54.5bn.

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.

"The focus is really on the pressure from cost (increases)", said Pearce. As a result, net margin will edge up from 4.6 per cent in 2017 to 4.7 per cent in 2018 despite operating margins being squeezed by increasing costs.