Airlines' profits expected to reach $31.4b in 2017

International Air Transport Association (IATA) Director General Alexandre de Juniac addresses the audience during a meeting of the IATA in Cancun, Mexico June 5, 2017.

He said demand for both the cargo and passenger business is stronger than expected. Whilst revenues are increasing, earnings are being squeezed by rising fuel, labor and maintenance expenses. For a third year in a row we expect returns that are above the cost of capital.

"Australia's pioneering tradition on aviation matters carries on to this day with competitive airlines, effective air traffic management and a commitment to smarter regulation", de Juniac said.

IATA estimated the current ban would cost $250 million in lost productivity, but could be as much as $1.67 billion if extended to flights from Europe to the US. That will contribute to pushing down airlines' per passenger profit to $7.69, down 15.8% from $9.13 in 2016 and 23.7% from $10.08 in 2015. "We are also seeing new business opportunities with internet commerce and the global distribution of time and temperature sensitive cargo, especially pharmaceutical products", said de Juniac.

But carrying 200 laptops in the bellyhold of an aircraft "is unsafe and against all safety regulations", de Juniac said quoting a top executive of an airline who pointed this out at a panel discussion during the three-day World Air Transport Summit going on here.

Latin American airlines are tipped to post a $US0.8 billion profit ($US2.87 per passenger) with 7.5 per cent passenger growth, while African airlines should post the only regional loss of $0.1 billion (-$US1.50 per passenger) as demand grows by a less than expected 7.5 per cent.

Passenger demand is expected to grow by 7.4 per cent over the course of 2017. That is 2.3 percentage points higher than IATA's previous forecast. This equates to an additional 275 million passengers, bringing the forecast total number of passengers in 2017 to 4.1 billion. If achieved, this would be the largest year-on-year growth in absolute passenger numbers ever recorded, IATA said.

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It said total cargo carried is expected to reach 58.2 million tonnes.

If it were extended to flights between the USA and Europe, the lost revenue would total around $1.4 billion, it estimates. That includes air cargo, which has awakened from a six-year coma.

The total industry fuel bill is predicted to be $129 billion, slightly below the 2016 level of $133 billion, and accounting for 18.8 percent of the industry's total costs. That will lead to jet kerosene prices averaging $64.0/barrel this year. The Resolution also reaffirmed the industry's commitment to work with governments to implement the Carbon Offset and Reduction Scheme for International Aviation (CORSIA) global CO2 emissions agreement.

Meanwhile, Singapore Airlines chief executive Goh Choon Phong has commenced his one-year term as IATA chairman, following the conclusion of the 2017 annual general meeting.

"We have a busy year ahead", Goh said in a statement.

The Arab rift was a stark reminder of the political risks to the airlines, which have run up healthy profits even as the global consensus they rely upon comes under the threat of nationalist and protectionist political currents.

  • Sonia Alvarado