It would represent a solid performance despite rising costs, primarily in fuel and labour, as well as an upturn in the interest rate cycle. These rising costs are the main drivers for the downward revision from the previous forecast of $38.4 billion in December 2017.

In 2017 airlines earned a record $38.0 billion but that high figure was severely distorted by special accounting items, such as one-off tax credits, which boosted 2017 profits.

Operating profits, while still high by past standards, have been trending slowly down since early 2016, as a result of accelerating costs.

“Solid profitability is holding up in 2018, despite rising costs,” said Alexandre de Juniac, IATA’s Director General and CEO.

“The industry’s financial foundations are strong with a nine-year run in the black that began in 2010 and the return on invested capital will exceed the cost of capital for a fourth consecutive year.

“At long last, profits are becoming normal for airlines. This enables them to fund growth, expand employment, strengthen balance sheets and reward our investors.”

In 2018, the return on invested capital is expected to be 8.5 per cent, down from 9 per cent in 2017.

This still exceeds the average cost of capital, which has risen to 7.7 per cent on higher bond yields (7.1 per cent in 2017).

This is critical for attracting the substantial capital needed by the industry to expand its fleet and services.