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A flydubai Boeing 737 departs from Dubai International (Photo: AirlineGeeks | Hisham Qadri)

IATA Delivers Optimistic Airline Forecast for 2018

This week the International Air Transport Association (IATA) held its annual Global Media Day in Geneva, Switzerland. The event is an opportunity for the airline organization to outline its priorities and initiatives for the coming year as well as deliver a summary of the current state of the industry.

The Need for Greater Collaboration

IATA Director General and CEO, Alexandre de Juniac, delivered the opening address with the key theme of his speech being the need for continued and expansive consultation and collaboration between and within the aviation industry and governments on a wide range of subjects with the organization’s priorities including safety, security, regulation, and Infrastructure. A particular focus of discussion centered on the demand for growth in the European aviation market and the challenges of increasing airport capacity to keep ahead of the anticipated growth.

With regard to constrained airports and the need for greater capacity, Europe has two-thirds of the airports in the world which require greater coordination to increase available slots. According to IATA, the Single European Sky initiative, which seeks to increase efficiency within European airspace, is being held up as some governments seek to protect national interests and restrict implementation. de Juniac, former CEO of Air France-KLM, was optimistic that consultation and collaboration will assist in finding a compromise to this issue and cited the recent signing of agreements with Poland and France and advanced discussions with Air Navigation Service Providers (ANSPs) in Germany, Italy, and Spain. He also cautioned governments seeking to fund infrastructure expansion by privatizing airports, warning them to “Be cautious, learn from past mistakes and protect this important national asset with ironclad regulation that prioritizes the national interest.”

The Challenge of Security

The ban on large Portable Electronic Devices (PEDs) in aircraft cabins by the U.S. and U.K. for security reasons earlier this year prompted action by IATA and other aviation industry bodies. de Juniac stated: “The initial actions by the US and the UK were taken unilaterally and caught the industry by surprise. And the implementation was painful for all concerned. After dialogue started, however, alternative measures to the ban were found. The key message here is the importance of industry consultation.”

de Juniac urged governments to incorporate the Global Aviation Security Plan (GASeP), approved by the International Civil Aviation Organisation (ICAO) last month, into their National Civil Aviation Security Programmes. The GASeP is a framework for security focused on: improving government-to-government cooperation, enabling the universal application of global standards, promoting better information sharing among governments and with industry, and facilitating the use of technology to address emerging issues in a timely manner.

Record Profit Forecast for 2018

Reflecting on the recent positive financial performance of airlines as a business group since 2010, de Juniac echoed a positive note in his summary.

For most of our history, our financial performance has not matched the value that we create. But in the last years airlines have dramatically improved profitability. Airlines, collectively, have been in the black since 2010. And in the last three years airlines have made an aggregate industry profit in excess of our cost of capital—something that has never happened before. For any other business, that’s normal. For the airline industry, it’s an extraordinary achievement! And hopefully, we are on the way to normalizing it!

However, de Juniac gave a note of caution in that the forecast record profit of $38.4 billion for airlines in 2018 is for the industry as a whole and falls $10 billion short of the profit of Apple, a single company.

John Flett
John Flett
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