Airlines set for record profit in 2018, fare rise forecast (RY4B)

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Led by U.S. airlines, net profits in the aviation industry are set to rise by some 11 per cent in 2018, the International Air Transport Association (IATA) said yesterday as it presented economic forecasts for the industry.

The International Air Transport Association (IATA) has cautioned governments across the world about privatising airports to fund growth, a statement that assumes significance as India plans to upgrade and build airports through private sector participation.

They, and global cargo, will fly on an extra 1000 aircraft by the end of 2018 as the global fleet expands to over 30,000 aircraft, IATA said. Profits are expected to grow by more than $2 billion in 2018, up to $11.5 billion. "More routes are being opened", he told the IATA global media conference in Geneva, Switzerland. The rise in expected passengers from 2017 represents a growth of six per cent, whereas in the number of passengers in 2017 enjoyed a 7.5-per-cent increase on 2016's numbers.

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.

In terms of air freight, cargo volumes are similarly expected to rise at a slower pace than this year, down from 9.3 per cent in 2017 to 4.5 per cent in 2018, to reach 62.5 million tonnes.

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While IATA expects improved profitability across all regions, North America will continue to lead the way, generating net gains of $16.4 billion.

The biggest challenge to airline profits was still rising costs, specifically oil prices and labour costs.

Airlines in North America generate almost half of airline revenue across the globe and the largest net profit with $15.6 billion this year.

De Juniac points out that airlines still face cost challenges in rising fuel prices, labor and infrastructure expenses. "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", De Juniac added. Aviation is the business of freedom and a catalyst for growth and development. After all, global tourists traveling by air are projected to spend more than $750 billion next year, which marks a 15 percent increase in just over two years.

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