Airlines begin to feel the financial pinch
Running an airline is often a difficult balancing act. There are so many external factors that can have a real impact on an carriers bottom line. Despite the industry enjoying record numbers of passengers, a storm cloud seems to be forming on the horizon with The International Air Transport Association (IATA) lowing its profit forecast for 2018 by 12per cent.
Despite strong trading at the start of the year, rising fuel and labour costs have created ever tightening margins. Oil prices have really started to gain momentum with the average barrel now costing $70, a 30per cent increase on 2017’s price of $54.90 a barrel. IATA’s projections had set oil prices for 2018 at $60 a barrel, showing just how quickly oil has are gathered pace.
IATA's director general, Alexandre de Juniac, was quick to cool concerns stating: "Solid profitability is holding up in 2018, despite rising costs. The industry's financial foundations are strong with a nine-year run in the black that began in 2010."
He also pointed out that increasing debate surrounding trade barriers could start to become a future contributing factor to price increases. "We haven't faced any significant decline in numbers of passengers or cargo related to trade wars or protectionist barriers up to now, but if it continues it will happen” he said.
Airlines continue to tap into the growing passenger numbers across Asia, as deliveries of planes to new carriers across the continent enable a whole host of new customers. These growing markets will prove vital with the possible end of a nine-year run in the black for the world’s largest carriers just around the corner.
