CHIANG RAI, 7 January 2019: A reliable industry bellwether, IATA’s annual forecast suggests the global airline industry will garner a USD35.5 billion profit in 2019.
Sounds good and most of the optimism emanates from the conviction that lower fuel will continue and the global economy will grow, albeit by a conservative 3.1%.
IATA says this will extend the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018.
The forecasted figures are slightly ahead of the USD32.3 billion expected net profit in 2018, which was revised down from USD33.8 billion forecast in June.
2019 is expected to be the 10th year of profit and the fifth consecutive year where airlines on the whole deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.
“We expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer,” said, IATA’s director general and CEO, Alexandre de Juniac.
Financial performance is expected to improve compared to 2018 in all regions except for Europe, where improvement has been delayed by the high degree of fuel hedging.
Asia-Pacific carriers are expected to report a USD10.4 billion net profit in 2019 (up from USD9.6 billion in 2018).
However, US airlines are adopting a more conservative stance requiring tight operations and a check on costs in an “industry notorious for its boom and bust cycles”.
Lower fuel costs will remain a strong factor for budget airlines in Southeast Asia that are expanding their networks to spur leisure travel growth across the region.
Thailand 38 million in 2018
A substantial increase in direct flights to Thailand’s leisure destinations beyond the Bangkok gateway was one of the key factors contributing to a positive trend in tourist arrivals in 2018, despite five-month setbacks in the China market.
Thailand is now almost certain to hit its 38 million target for tourist arrivals in 2018. For the months January to November the country registered 34.4 million visits. Based on a conservative increase in December, compared with the same month’s performance in 2017, the country should close the ledger on the 2018 tally at between 37.7 to 38.1 million visits.
The performance reflects a simple ‘footfall ‘count of foreigners crossing the nation’s border checkpoints land sea and air and does not necessarily reflect genuine tourist visits.
Vietnam 15.4 score
An early bird for presenting timely tourist arrival data Vietnam announced 3 January that arrivals had surpassed the 15 million target in 2018.
Total international arrivals for the year reached 15,497,791 arrivals, up by a substantial 19.9% over 2017.
Laos falls short of target
Laos will not be so lucky despite its Visit Year promotion that closed 31 December.
The country was counting on 4.9 million tourist arrivals in 2018, but it will now consider itself lucky if it passes the 4 million mark.
Over the last two years it has suffered declines. 2017 closed with a decline of 8.7% on 3.8 million arrivals, while 2016 closed with a 10% drop.
The government has set an ambitious target of 5.2 million for 2019 and 5.5 million for 2020.