The airline industry is on course for record profit in 2018

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Global passenger traffic demand, measured in total revenue passenger kilometres, rose by 7.2 per cent in October 2017 compared with the same month previous year, said the International Air Transport Association (IATA).

The bulk of the profit generated next year will come from North America where, according to IATA, airlines in the region are forecast to record a combined net profit of $16.4 billion.

IATA said there "continues to be indications" that inbound United States travel is being deterred by the additional security measures now involved when travelling to the country. Meanwhile, airlines in the Asia-Pacific region witnessed an increase in freight volumes by 4.4 percent, and the capacity expanded by 3.9 percent in October 2017, compared to the same period past year.

"Strong demand, efficiency and reduced interest payments will help airlines improve net profitability in 2018 despite rising (operating) costs", said IATA, whose 280 members account for more than three quarters of global air traffic. Further, Juniac said the forecast of record net profit of $38.4 billion for the next year is still $10 billion shy of the profit that Apple announced for 2016.

"Demand for air freight grew by 5.9 percent in October".

"To be blunt, we have not seen an airport privatisation that has fully lived up to expectations", said Alexandre de Juniac, director general & CEO at IATA.

In line with stronger GDP, the world's airlines are expected to carry 4.3 billion passengers next year, up from a projected 4.1 billion this year.

"Per passenger, airlines on average will make less than $9 and the net margin of 4.7 per cent is hard won", he added.

In 2018, direct employment by the airline industry is forecast to be more than 2.7 million.

Jet fuel prices are expected to rise even more quickly to $73.8 per barrel (up 12.5 per cent on $65.6 in 2017).

All major regions are expected to contribute, led by Europe and the U.S. More cargo is being sent by air as people increasingly buy goods over the Internet-giving a particular lift to Asian exports.

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. Demand to and from North America fell in year-on-year terms for the seventh consecutive month in September and it remains the only global market not to have grown in annual terms this year.

"Overall unit costs are expected to grow by 4.3 per cent in 2018 [a significant acceleration on the 1.7 per cent increase in 2017]".

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