Preliminary financial performance figures from
the Association of Asia Pacific Airlines (AAPA) reveal that the
aggregated net earnings of Asia Pacific airlines halved in 2018 to
a combined US$4.7 billion, from the US$9.6 billion recorded in the
Continued expansion in the global economy
underpinned further growth in air passenger and air cargo markets,
but airlines faced an increasingly challenging operating
environment marked by significantly higher jet fuel prices,
adverse currency movements and rising pressures on non-fuel cost
Overall, international passenger traffic, in revenue
passenger kilometer terms (RPK), grew by a robust 6.9% in 2018,
stimulated by rising incomes, further expansion of airline
networks and widespread availability of competitive airfares.
International air cargo traffic as measured in freight tonne
kilometres (FTK) slowed to a 2.2% increase for the year, as
uncertainties stemming from unresolved international trade
disputes adversely affected business confidence and levels of
Collectively, the region's carriers achieved
operating revenues totaling US$204.7 billion in 2018, a 10.4%
increase compared to the US$185.4 billion registered in the
previous year. Passenger revenue rose by 10.4% to US$159.0
billion, driven by the solid growth in passenger demand and
slightly higher average air fares. Passenger yields recorded a
3.1% rise to 8.1 cents per RPK after several years of decline.
Despite slower growth in air cargo demand, cargo revenue increased
significantly, by 11.5% to US$21.2 billion, with an 8.9% increase
in cargo yields to 27.1 US cents per FTK.
expenses grew by 12.5% to an aggregate total of US$194.6 billion
in 2018. This was driven by a significant 27.5% rise in fuel costs
to US$54.5 billion, in tandem with the 29.8% jump in global jet
fuel prices to an average US$85 per barrel. Consequently, the
share of fuel expenditure as a percentage of total operating
expenses rose by 3.3 percentage points to 28.0%. Non-fuel
expenditure increased by 7.6% to US$140.1 billion, driven by
higher staff costs as well as landing fees and en-route charges.
Commenting on the 2018 financial results, Mr.
Andrew Herdman, AAPA
Director General said, "Asian airlines are operating in highly
competitive markets, and were not able to pass on the full cost
impact of significantly higher fuel prices we saw in 2018.
Consequently, overall operating margins narrowed to 4.9% for the
year, from 6.7% in 2017. After extraordinary items, which included
foreign exchange losses for a number of carriers, aggregate net
earnings fell to US$4.7 billion in 2018. As an indication of the
highly competitive nature of the airline business, this represents
an average profit level of just under US$5 per passenger flown."
Looking ahead, Mr. Herdman said, "Asia Pacific airlines continue
to face significant headwinds in the form of persistent cost
pressures, stiff competition as well as further volatility in oil
and currency markets. Whilst air passenger markets remain
relatively resilient, the weak sentiment surrounding air cargo
markets is a warning signal that trade disputes are doing real
damage to the economy and could further undermine global growth
prospects going forward."
"Undaunted, Asia Pacific carriers
continue to evolve, adapting to a dynamic market place. Airlines
are continuously reviewing their business plans, implementing
measures to improve efficiency and carefully managing costs whilst
seeking opportunities to maximise revenue. In addition, the
region's airlines remain at the forefront of industry
developments, launching new services and investing continuously in
new technologies with the aim of providing passengers with high
levels of customer service and a seamless travel experience."