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Airlines Are Set to Make Even More Money Off Passengers in 2018

Airlines Are Set to Make Even More Money Off Passengers in 2018

Iata said passenger numbers are expected to increase to 4.3 billion in 2018.

In the three months to June, Singapore Airlines recorded a profit of S$281 million (US$208 million), up S$88 million (US$65 million) from a year before.

IATA noted that labour costs are now a larger expense item than fuel, comprising 30.9% of costs in 2018.

While the momentum may moderate in 2018, e-commerce will likely help underpin global cargo growth. Revenues from the passenger business are forecast to grow to $581bn, up 9.2 per cent on $532bn expected in 2017, according to Iata. The inventory-to-sales ratio in the U.S. is looking sideways, thereby indicating that the period when companies look to restock inventories quickly-which often gives air cargo a boost-has ended.

This was contained in IATA's latest analysis of demand for passenger air transport.

The cargo business continues to benefit from a strong cyclical upturn in volumes, with some recovery in yields, Iata said in its report.

European carriers' October demand climbed 6.2% over October, 2016, which was a slowdown compared to the 7.2% year-over-year growth recorded for September.

For global traffic, the Asia-Pacific region showed the largest growth in passenger traffic in October, up 10.3% YOY, driven by a solid regional economic backdrop and growing numbers of airport-pairs in operation.

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"Passenger market conditions vary across the region". The group disclosed in Geneva, Switzerland that as a result of the situation, African airlines' traffic grew 7.5 per cent year-on-year in October, up from 3.6 per cent in September.

"Broadly speaking, South-east Asian airlines' operating profits and profit margins are expected to be lower year on year in 2018, if fuel prices remain at current levels or rise further", said Corrine Png, chief executive of transport research firm Crucial Perspective.

For most of airlines' history, its financial performance has not matched the value that it creates, he told journalists.

Performance for individual markets in South-east Asia will also vary, Ms Png added.

Airlines are on course to increase profits again in 2018, a major industry body has said.

Over the same period, airline service costs for consumers have fallen from US$0.86 per one tonne kilometre to US$0.80, a 7% decline over two decades according to IATA.

In particular, South-east Asian carriers are facing fierce competition on long-haul routes to North America and Europe, from the Gulf trio and the key Chinese carriers.

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