Airlines heading for a decade in the black: IATA

New Delhi, Dec 13 (UNI) The global airline industry will log a net profit of $35.5 billion, estimated a bit higher than the expected $32.3 billion in 2018, says the International Air Transport Association.

Lower oil prices and solid, albeit slower, global economic growth are extending the run of profits for the global airline industry, after its profitability was squeezed by rising costs in 2018.

That means that 2019 would be the tenth year of profit and the fifth consecutive year when airlines deliver a return for its investors.

"We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer," said IATA Director General and CEO Alexandre de Juniac, adding that the run of solid value creation for investors will continue for at least another year.

IATA in a statement said the 2019 industry outlook is based on an anticipated average oil price of $65 dollars per barrel, lower than the $73 dollars experienced in 2018, following the increase in US oil output and rising oil inventories.

Fuel is expected to account for 24.2 percent of the airline industry's average operating costs.

The airline industry in all regions, except Africa, are expected to report profits in 2018 and 2019, the IATA said. While carriers in North America continue to lead in financial performance, accounting for nearly half of the industry's total profits, Asia-Pacific carriers, especially some new low-cost carriers, are seeing strong growth due to a strong regional economic growth.

"But there are downside risks as the economic and political environments remain volatile," De Juniac said, adding that the aviation industry needs, for instance, more clarity on how Brexit will play out if a solid, steady growth is to be achieved.

He expressed deep concern over the impact on the industry by a less inclusive globalization and increasing protectionist policies or trade disputes over the world.

"Prosperity will come with borders that are open to people and trade. That's a pre-requisite for aviation to deliver its best to global economic and social development."

Passenger traffic (RPKs) is expected to grow 6 per cent in 2019, which will outpace the forecast capacity (ASKs) increase of 5.8 per cent, and remains above the 20-year trend growth rate.

The 2019 average return airfare (before surcharges and tax) is expected to be $324 (2018 dollars), which is 61 per cent below 1998 levels after adjusting for inflation.

“Air travel has never been such a good deal for consumers. Not only are fares staying low, the options for travelers are expanding. Some 1,300 new direct links between cities were opened in 2018. And 250 million more journeys by air occurred in 2018 than in 2017,” said de Juniac.

The Montreal-based IATA is a trade association of some 290 airlines from 117 countries and regions, representing about 82 perc ent of global air traffic.