IATA’s confidence index survey shows industry is hopeful, but cautious
The International Air Transport Association (IATA) has released the results of its latest “Airline Business Confidence Index” survey, which indicates that industry leaders are still optimistic about continued growth in demand for air freight, but cautious as they come down from the high of last year’s heyday, for a few reasons.
Chart shows percentage of respondents reporting deterioration/decrease, no change, and improvement/increase in traffic volumes (left to right)
The survey, conducted in early July, queried chief financial officers and heads of cargo on subjects like demand for capacity, trade tensions and increased input costs. The study indicates a “squeeze” felt among cargo carriers that intensified during Q2 2018, resulting in more moderate year-over-year profit margins across regions.
“Half of the respondents reported that profitability increased in annual terms in Q2, but this was the lowest proportion since April 2017,” the study said.
Many carriers are pointing to rising fuel prices as the principal cause of the constriction. Three out of four respondents said they were hit with higher unit input costs in Q2 2018 than the same period last year.
Fifty-seven percent of participants expect profits to continue to increase between now and July 2019, but at the same time, the proportion surveyed that expect to see a “deterioration” at some point over the next 12 months jumped to 32 percent – its highest level since October 2016 – participants citing continued anticipation of higher input costs.
Still, almost two-thirds of respondents reported higher year-over-year air cargo volumes during Q2. Participants generally reported that conditions “remained strong on the key markets across the Pacific and Atlantic,” despite rising trade tensions between the U.S. and China at the time of the survey.
To read IATA’s analysis of the survey, follow this link.