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IBA consulting firm reveals key trends in cargo for 2018

IBA, the new winner of the Airline Economics’ ‘Appraiser of the Year ‘award, presented its latest market update on Jan 17th. While comprehensive details are available at www.iba.aero, the key themes are summarised below by Dr Stuart Hatcher, Chief Intelligence Officer, Mike Yeomans, Head Analyst – Commercial Aircraft & Leasing, and Paul Lyons, Head of Advisory.

The team also takes a closer look at the 1,300 returns and extensions planned for 2018 and considers whether this year will be another year of extensions.

Traffic growth forecasts across passenger and freight markets remain strong for 2018, despite downgrades from 2017 levels. While emerging markets drive demand, IBA remains cautious about the “burgeoning middle class play” in India and other lower-income countries.

Search for yield will be found elsewhere as the narrowbody market tightens. Whether that is a shift to older aircraft and lower tier operators/higher risk destinations, or further capital in the engine and freighter sectors.

IBA’s analysis of 2017 transaction volumes suggests a tightening of supply of the most highly favoured assets. A decline in on-lease trading levels of more popular A320 and A321 models is contrasted by an increase in trades of leased A319s and 737-700s.