GENEVA: The Middle East airlines are forecast to see net profits improve to $600 million in 2018, up from the $300 million they will make this year, the International Air Transport Association (IATA) said in its financial outlook on Tuesday in Geneva.
This year’s profit forecast for the region’s airlines has, however, been revised downwards from the $400 million profit IATA forecast in June, which was a 63.6 per cent drop from the $1.1 billion the airlines made in 2016.
Demand in 2018, meanwhile, is expected to grow by 7 per cent, outpacing announced capacity expansion of 4.9 per cent (the slowest since 2002), as per IATA estimates.
“The region’s carriers face challenges to their business models, and from low oil revenues, regional conflict, crowded air space and the impact of travel restrictions to the US,” said Brian Pearce, IATA’s chief economist.
He added that competition from the new “super connector” Turkish Airlines is also one of the major challenges the region is facing at the moment.
“But despite the challenges, there is positive momentum heading into 2018,” Pearce said.
Globally, meanwhile, the airlines industry is expected to see its net profit rise to $38.4 billion in 2018, marking an improvement from the $34.5 billion expected net profit this year, IATA said.
The aviation watchdog said the 2017 forecast has been revised up from the $31.4 billion forecast in June.
More than 4 billion passengers will be travelling for the first time this year, said Brain Pearce, IATA’s chief economist. He added that the number is expected to go up to 4.3 billion next year.
“Strong growth expected next year for commercial aviation,” he said. “And we will see record load factors in 2018… something like 81.4 per cent.”
The industry will also see a rise in overall revenues to $824 billion in 2018, up 9.4 per cent from $754 billion in revenues expected this year, as per IATA estimates.
“These are good times for the global air transport industry. More people than ever are travelling. The demand for air cargo is at its strongest level in over a decade.
"More routes are being opened, and airlines are achieving sustainable levels of profitability,” said Alexandre de Juniac, IATA’s Director General and chief executive.
