The airline industry group IATA lowered its estimate for revenue growth this year from 5% to 4.2% due to the impact of the trade war on economic growth and business confidence
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The trade war is affecting passenger traffic between Asia and North America in particular, which is now the weakest market of the top-10 passenger markets. By comparison, the passenger market between Europe and Asia, ranked fourth in the world, remains strong. Fortunately for airlines, expenses did not rise as much as they had originally forecast this summer during the IATA Annual General Meeting.
Some of the factors driving the airlines’ subdued optimism for 2020 include forecasts for 2.7% GDP growth in 2020 and a projections of a world trade rebound to 3.3% in 2020 from 0.9% in 2019. Also, fuel costs are expected remain low—averaging $75.60 per barrel for Jet kerosene in 2020; which will result in an overall reduction of the fuel bill for airlines from $188 billion in 2019 to $182 billion in 2020. Also, unit labor costs are expected to remain relatively flat.
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