Aviation is an amazing industry. I call it the business of freedom.
In 2018 the world’s airlines provided about 4 billion passengers the freedom to travel over a global network of some 22,000 routes. The average cost of this transport was half that of two decades ago. And since 2010 the carbon footprint per passenger has reduced by aboout 2.8% per year.
Last year, airlines also enabled the freedom to do business globally by transporting 64 million tonnes of cargo to markets around the world. This activity supported a third of global trade by value, generated 65 million jobs and underpinned $2.7 trillion of GDP.
In 2018 the world’s airlines earned a collective net profit of $30 billion. Industry revenues topped $812 billion and 8% return on invested capital was generated.
In each year since 2010 the airline industry earned an aggregate profit. And since 2015 that profit has exceeded the average cost of capital. While some airlines continue to face financial challenges, this nine-year profitability streak at the industry level marks a major shift from the sector’s historic boom-bust financial cycle.
The industry’s newly found financial resilience enables it to weather shifts in the operating environment without plunging into crisis. Nonetheless, we expect profits to be squeezed in 2019 as a result of oil price volatility, rising costs for labor and infrastructure, ever-increasing taxation, and a tapering of demand.
The threat of trade wars and protectionist activity also looms large. Globalization has made our world more prosperous. And aviation will play a central role in enabling a more inclusive globalization that spreads its benefits more evenly. But we must be firm in insisting on borders that are open to people and to trade, or the benefits of aviation will be severely curtailed.
Over the next two decades, the demand for air transport is expected to double. The ability to successfully meet this demand will require the industry to excel in several areas. And, as aviation remains a highly regulated industry, governments will play a key role. With the 40th ICAO Assembly scheduled for late in 2019 we have an important opportunity to engage government action at the global standard-setting level.