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Mideast carriers to pilot aviation growth in 2018

Mideast carriers to pilot aviation growth in 2018

Demand for global air freight increased 5.9 percent in October, outpacing the 3.2 percent average growth rate in air freight capacity over the last decade, the International Air Transport Association (IATA) reported on Friday.

All regions are expected to post improved profits year-on-year in 2018 with the North American carriers leading the pack at US$16.4 billion, which is almost half of the collective bottom line.

Demand, according to IATA has been boosted by very strong growth on the trade lane to and from Asia, which increased by more than 67 per cent in the first nine months of the year.

"Demand for air travel remains strong as we head into the holiday travel season, and signs point to the broad-based economic upturn continuing into 2018, which is good news for demand for air travel". "It's still, however, a tough business and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses", he told a media briefing here today.

De Juniac urged governments to "raise their game" and do more to ensure infrastructure can cope with higher aviation demand.

However, the industry also faces longer-term challenges and many of them are in the hands of governments, he said.

He said the aviation industry benefits to the economy include 2.7 million direct jobs and support for 3.5 per cent of global economic activity.

"We are eight years into this air travel cycle, but we see no reason at present to expect that cyclical pattern to repeat itself", IATA chief economist Brian Pearce said, with reference to a trend that would usually indicate a major downturn was due.

Revenues from the passenger business are expected to grow to $581 billion (up 9.2 per cent on $532 billion in 2017). De Juniac has said insolvency filings at carriers including Air Berlin Plc and Alitalia SpA reflect over-capacity rather than market weakness.

The forecast exceeds IATA's expectation of $34.5 billion for 2017 net profit.

Airlines in all regions recorded growth.

It's the 15th consecutive month that the demand growth outstripped the capacity growth, which is believed to be a positive indicator for load factors, yields, and financial performance.

Middle East: Middle East carriers are forecast to see net profits improve to $600 million in 2018, up from $300 million in 2017. After languishing in the doldrums in recent years, cargo volumes are slated to expand from 59.9 million tonnes this year to 62.5 million tonnes in 2018. This was down from $1.1bn in 2016. "More people than ever are traveling".