Airlines Report a Record $38 Billion in Expected Profits for 2018
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
This is an incredibly profitable time for airlines, as highlighted again this week in a International Air Transport Association (IATA) report. The report is headlined with a yawn-inducing “Strong Airline Profitability Continues in 2018,” but inside, the organization dropped some incredible stats about worldwide airline operations.
Let’s make it easy to get the important stats by putting them in listicle form:
1. IATA forecasts global industry net profit to rise to $38.4 billion in 2018.
The IATA expects a record-breaking $38.4 billion in profits for the airline industry in 2018, compared with $34.5 billion in profits expected for 2017. To put this in perspective, IATA calculated a $5 billion loss for airlines in 2008 and just $4 billion in profits in 2011.
2. North American airlines have generated more than half of the industry’s profits produced in the past three years.
Despite carrying less than 25% of the world’s airline traffic, North American airlines account for over half of the worldwide industry’s profits. And while IATA groups all “North American airlines” together for this stat, the profits are even more concentrated than that. With the five largest US carriers earning $5 billion per quarter, these five airlines alone are on pace to account for more than half of the worldwide aviation profits. Mind you, this incredible profitability is happening at the same time as some of these airlines are aggressively working to block competition from Middle Eastern airlines and complaining that disclosing baggage fees with airfare would cause “significant costs,”
3. Airlines are expected to carry 4.3 billion passengers in 2018.
In yet another record, IATA expects a 6% growth in number of passenger enplanement from 2017 to 2018, raising the total number of passengers carried to 4.3 billion. These passengers are expected to generate $581 billion in revenue for airlines. From 2017 to 2018, airlines are only expected to grow capacity by 5.7%, so prepare for more full flights.
4. Over 20,000 routes are served by direct flights.
The world has never been more connected. IATA calculates that the “unique city pairs served by airlines grew to over 20,000 in 2017.” That’s double the number of city pairs served in 1996.
This number has surely been bolstered by aircraft such as Boeing’s 787 Dreamliner and Airbus’ A350. These long-range aircraft provide fuel efficiency with a moderate size, perfect for “long and skinny” routes where demand didn’t justify previous long-haul aircraft. This has created opportunities for new lines such as United’s unique service from San Francisco (SFO) to Hangzhou (HGH), Xi’an (XIY) and Chengdu (CTU), China and British Airways’ expansions from London to Austin (AUS), Fort Lauderdale (FLL), Nashville (BNA), New Orleans (MSY) and many more.
5. Since 1996, the inflation-adjusted cost of air transport for consumers has halved.
I’m a bit curious about how this claim is calculated, to make sure that it factors in all ancillary costs that airlines have added. However, there’s no doubt that airfare costs have dropped. Sure, everyone can probably remember a route that was cheaper “back when,” but the cost of getting from A to B has continued to become more affordable, thanks to fuel-efficient aircraft, low-cost carriers and cost cutting by airlines.
6. The value of cargo carried by airlines is expected to exceed $6.2 trillion in 2018.
While most of us are focused on what’s going on inside the cabin of aircraft — with the exception of our checked bags — there’s a lot going on underneath us. Cargo operations continue to soar for airlines around the world, and the numbers are quite incredible.
In 2018, IATA expects 62.5 million tonnes of cargo to travel by air with the value exceeding $6.2 trillion. That’s 7.4% of the world’s Gross Domestic Product (GDP) traveling by air according to IATA calculations.
Since humans are terrible at processing large numbers, let’s try to break that down: If airlines carried nothing but Tesla Model 3s, that’d be over 177 million cars carried. That’s almost one car for every person with a drivers license in the US. By weight, those 62.5 million metric tons are equivalent to 4.6 billion 30-pound checked bags, which is more than the 4.3 billion passengers expected to fly in 2018.
7. Direct employment by airlines will exceed 2.7 million people worldwide in 2018.
Just about 1 in every 2,756 people in the world will work for an airline in 2018. That’s a lot of pilots, flight attendants, airport agents, mechanics, dispatchers, bag handlers, operations folk, crew schedulers, etc. whose jobs are sustained by our flights.
8. Airlines average $8.90 in net profit per passenger.
We’ve already covered the amazing profitability of airlines ($38.4 billion) and the incredible number of passengers (4.3 billion) expected in 2018. But, it’s interesting when you divide the two numbers: On average worldwide, airlines will earn just $8.90 in profits each time you fly in 2018. It might seem petty that the airline won’t serve you free snacks or is strict with baggage limits, but earning a few more dollars per passenger makes a massive difference to an airline’s bottom line.
For even more stats, check out the full IATA report here.
Featured image by Chung Sung-Jun / Getty Images
What’s your favorite stat about worldwide airline operations?
WELCOME OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.