The average net earnings for Asia Pacific’s 25 main carriers fell a little more than 50% year-on-year (YOY) in 2018, in light of “significantly higher jet fuel prices, adverse currency movements and rising pressures on non-fuel cost items,” according to Association of Asia Pacific Airlines (AAPA).

Profits dropped to $4.7 billion in 2018 from $9.6 billion in 2017. This is despite strong international RPKs, which grew 6.9% YOY, spurred by rising incomes, further expansion of airline networks and widespread availability of competitive airfares.

The 25 carriers reported operating revenues of $204.7 billion, up 10.4% YOY, from $185.4 billion. Passenger revenue also increased to $159 billion. Yields grew 3.1% YOY after several years of decline.

In the cargo sector, revenue increased 11.5% YOY to $21.2 billion, with a yield of 8.9% YOY. International cargo traffic, measured as FTKs, slightly increased by 2.2% YOY.

Operating expenses grew 12.5% YOY to an average of $194.6 billion, driven by $54.5 billion worth of fuel costs, up 27.5% YOY. Non-fuel expenditure increased by 7.6% to $140.1 billion, driven by higher staff costs as well as landing fees and en-route charges.

“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,” AAPA DG Andrew Herdman said. “As an indication of the highly competitive nature of the airline business, this represents an average profit level of just under $5 per passenger flown.”

Chen Chuanren,