Global air passenger traffic demand up 7.2 percent in October: IATA

An Emirates Boeing 777 and an Airbus A330-300. Iata says airline profits worldwide will hit $38bn next year. Issouf Sanago

The ease of doing business introduced by the Federal Government is paying off as the International Air Transport Association (IATA), the clearing house for over 280 global airlines, said business confidence levels in Nigeria near a three-year high.

It is also an announcement of global passenger traffic results for October showing that demand (measured in revenue passenger kilometres or RPKs) rose 7.2 per cent, compared to the same month a year ago.

It said airline capacity rose 6.2 percent and load factor - a measure of how full planes are - increased by 0.8 percentage points to 80.8 percent. It will on Tuesday present its updated economic forecasts for the industry at a media event in Geneva.

In terms of revenue per passenger kilometres (RPK), airlines are expected to see a 6% growth in 2018 compared with a 5.7% expected increase in available seat kilometres (ASK). "It's still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses".

Yesterday, Ryanair said that its passenger numbers rose 6pc to 9.3 million in November, with its load factor one point higher at 96pc.

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.

Asia-Pacific: Airlines in this region are forecast to see profits of $9 billion in 2018, up from $8.3 billion in 2017.

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Projecting these figures into the future, IATA predicted that China will be the largest aviation market in the world by 2025, with the United States of America in second position and India in third.

IATA represents around 275 airlines comprising 83 per cent of global air traffic.

At the moment, however, traffic in India is growing at the fastest rate in the world.

"Cargo yields are expected to improve by 4% in 2018 (down from the 5% in 2017). The airlines based in these markets - SIA, VietJet, Cebu Air - could face greater pressure to discount more to fill up their excess capacity".

Global trade has also helped cargo operators, with an estimated 62.5 million tons of freight to be carried in 2018, constituting an increase of 4.5 percent from the 2017 forecast. "Next year, we are expecting Brent crude to be around US$60 and jet fuel to be around US$74 a barrel".

"We believe industry profitability is on a more sustained path so even in weakened business conditions we think the industry will perform better than it has in the past because of the (load factor) gap", said Pearce, noting that while low oil prices have contributed, the load factor gap has been above breakeven level since before 2015.

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