International aircraft lessor Avolon issued its 2019 Industry Forecast, titled ‘Buckle Up’. The paper, written by Avolon’s Head of Strategy Dick Forsberg, provides a review of 2018 while offering predictions for the industry in 2019.
Forsberg commented, “While not at the recent record levels, 2018 represented the airline industry’s ninth consecutive year of profitability. While load factors continue to rise globally, airline profitability remains highly concentrated, with nearly half being allocated by North American carriers. Additionally, numerous airline failures over the last year have indicated that full planes are not always cause for celebration. This leads to the conclusion that, although supply and demand is nominally in balance, there are simply too many cheap seats being sold in the market and too few expensive ones.
“Continued oil price volatility will leave some less well hedged airlines exposed. In this fuel price environment, the most effective hedge against oil price movement for airlines is operating the most fuel-efficient fleets. For lessors, the ability to apply appropriate risk-management processes to their airline customers, and pick up early warning signs of trouble ahead, will be critical in determining success.”
The 2019 forecast indicates:
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