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Real Economy News in Real Time
R/€ = 15.82 Change: -0.10
R/$ = 13.92 Change: -0.09
Au 1283.50 $/oz Change: 4.54
Pt 792.11 $/oz Change: -6.92
 
 
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Airline industry growth expected to continue into 2019

12th December 2018 BY: Nadine James
Creamer Media Writer
Iata DG and CEO Alexandre de Juniac
Iata DG and CEO Alexandre de Juniac

Despite protectionist policies, a lack of infrastructure and a dearth of skilled workers that are challenging the airline industry, the International Air Transport Association (Iata) expects the industry will grow further in 2019.

The industry has “been in the black since 2010” and is expected to generate a net profit of $35.5-billion in 2019, a marginal improvement on the $32.3-billion expected for this year, Iata director-general and CEO Alexandre de Juniac told journalists at the fifteenth yearly Iata Media Day, in Geneva, Switzerland, on Wednesday.

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“We must aim for more inclusive globalisation. But that will not be achieved with protectionist policies or trade wars. Prosperity will come with borders that are open to people and to trade, as it is a prerequisite for aviation to [assist in] global economic and social development,” De Juniac commented.

He added that the industry was “approaching an infrastructure crisis.”

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De Juniac noted that Iata projects air journeys will increase by four-billion by 2037 and that current infrastructure planning by governments is not “ambitious” enough to meet that capacity.

He commented that air traffic management was buckling, with delays at various airports worldwide as demand growth outpaces capacity growth.

Further, he pointed to recent passenger polls in which 70% of passengers indicated a sense of overcrowding at airports. He explained that, while solving airport capacity problems are complex, digital transformation could improve the manner in which airport infrastructure is used or managed.

Issues pertaining to transparency, slot auctioning and privatisation had to be resolved.

Iata chief economist Brian Pearce, meanwhile, said lower oil prices and solid economic growth had extended the run of profits the industry was experiencing, with 2019 expected to be the fifth successive year where airlines create value for investors, and its tenth successive year of profit.

Additionally, overall revenue is expected to increase by 7.7% from $821-billion this year to $885-billion in 2019; passenger numbers are expected to increase marginally from 4.34-billion to 4.59-billion; and cargo tonnes carried are expected to increase to 65.9-million from 63.7-million this year.

Pearce added that the industry was expected to contribute an estimated $130-billion in tax revenue in 2019.

He noted, however, that there were concerns about “rising nonfuel costs”.

“This challenge will be enduring in 2019, with rising costs and rising wage pressures, [combined] with US interest rates creating a strong dollar environment.” Pearce noted that the strong dollar put additional pressure on several economies and, therefore, on airlines, where currency exchange rates exacerbated the prices of major cost items, which are priced in dollars.

He indicated that there would be “some stability in profitability", with North American airlines generating almost half of the industry’s total profit, while African airlines were broadly expected to remain unprofitable.

De Juniac noted that the industry transports 12-million passengers and around 180 000 t of cargo a day, supports 63-million employees and underpins 3.6% of the global gross domestic product, with an economic impact of $2.7-trillion a year.

The organisation also launched a new brand which “reflects the dynamism of air transport and innovation that Iata is leading”.

*Nadine James is attending the Iata Media Day as a guest of Iata. 

EDITED BY: Chanel de Bruyn Creamer Media Senior Deputy Editor Online
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