Airline bosses report sky high operating costs but remain optimistic for 2017

(ShareCast News) - The International Air Transport Association has released research suggesting a challenging environment for airlines, including lower passenger yields and an increase in operating costs.According to the organisation, almost two-thirds of respondents to its survey of industry leaders said that the final quarter of 2016 saw lower passenger yields than in 2015.In addition, 31% of those questioned reported an annual increase in operating costs during the quarter, which was the biggest increase since the second quarter of 2014. It projects that these are likely to increase further in 2017."With a rebalancing in the oil market slowly taking place, and some signs of emerging labor cost pressures, the forward-looking weighted-average score remained above the 50-mark for just the second time in the past 10 surveys, pointing to a further increase in input costs over the coming year," the IATA said in its January 2017 survey.In terms of profitability, the outlook for the sector remains unchanged, with an even balance of CFOs and head of cargo reporting increases and decreases in profit for the period to the end of December.However, the research showed that the majority of those in the sector expect profits to increase in 2017."The majority of respondents (42%) expect profits to increase over the next 12 months - the first time this has been the case since the April 2016survey. But this proportion is some way below the 60-70% level that was the norm a few years ago."This optimism is cemented with the belief that passenger volumes will grow throughout the year. 74% of respondents told the IATA that volumes will increase in the next 12 months, the highest figure since 2013.