Airline business confidence remains high for 2018

A wide survey of airlines conducted by the airline association IATA in early Jan-2018 shows management confidence remains high, although there are some concerns around higher fuel costs, along with an expectation that profits will fall from last year’s highs.

Nearly four out of ten airlines expect to increase employment levels over the next year, although this is slightly down from the Jan-2017 survey level.

With the expectation of rising demand most airlines also think fares will rise over the year. CAPA’s projections for the Asia Pacific region indicate significant downward pressure on yields/fares as competition levels remain high.

The survey is a global one, with no regional breakdown.

Demand Growth key findings:

  • 86% of respondents reported that they expect passenger volumes to rise further over the year ahead – the highest proportion in more than a decade. With less than 5% expecting a fall in demand, the forward-looking weighted-average score rose to its highest level since Q4 2013.
  • The proportion of respondents who expect profits to fall over the next 12 months rose to its highest level since Q2 2017, with many citing an expected impact of higher oil prices on profitability. Nonetheless, this was offset by a larger increase in the share expecting profitability to increase over the period. Notwithstanding some volatility during 2017, the forward-looking score has trended upwards since falling below the 50-mark in Q2 2016.

Recent and expected change in traffic volumes a) Passenger

Source: IATA Airline Business Confidence Index Jan-2018

Employment key finding

39% of survey respondents reported an increase in employment levels in Q4 2017 relative to the same period in 2016 – slightly below the outcome in the previous survey. 19% of respondents reported a fall in employment levels in Q4, down from 21% last quarter, although an increase in the proportion of responses indicating no- change means that the backward-looking weighted-average score fell slightly from the previous survey.

Source: IATA Airline Business Confidence Index Jan-2018

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