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How airlines continued to thrive in 2017 despite challenges

Airlines continued to expand and kept a grip on their improved profitability off the back of strong air travel demand in 2017, even if the positive mood was punctuated by a series of high-profile challenges and service interruptions that dominated headlines.

There were a number of flashpoints across the year, ranging from the furore US carriers faced around denied boarding; flight cancellations resulting from system/power outages, IT failures and pilot-rostering headaches; and travel restrictions imposed by the USA, UK and, in the case of Qatar, some neighbouring states.

This added wider challenges to an environment in which costs began to creep up on rising oil prices while yields struggled to turn the corner, a situation compounded in some markets by intense competition.

But against this backdrop IATA still projects the industry will record a collective net profit for $34.5 billion for the year, marking a third consecutive year where airlines will generate returns above their cost of invested capital.

Airlines continued to grow strongly. Passenger numbers are expected to be around 7% higher across 2017, and airlines lifted capacity in line with this strong demand. Crucially, passenger load factors stayed at record high levels.

Airline share prices, in line with broadly positive financial markets, rose for most leading operators.

While some familiar names and brands fell by the wayside during the year with Air Berlin and Monarch Airlines as high-profile casualties a number of new players emerged. Much of that start-up activity was in the low-cost sector, including its embryonic long-haul subdivision.

Network carriers meanwhile continued to develop partnerships, joint ventures and equity investments to cement key relationships. While Etihad's European investments brought major setbacks for its strategy, the likes of Delta Air Lines and Qatar Airways continued to strike partnerships deals during the year.

These themes, together with capacity, share-price and airline data snapshots for 2017, are explored in detail in FlightGlobal's Airline Market Review 2017, which can be downloaded here.