Asia-Pacific airlines saw a collective 31.3 % rise in net profits in 2017, earning $8.8 billion in net profit during 2017, compared to $6.7 billion in 2016, according to the Association of Asia Pacific Airlines (AAPA).

The strong results—aggregated from 24 Asia-Pacific carriers—reflected the reach of global economic growth into both advanced and emerging markets. The region responded with improvements in both passenger and cargo traffic and accompanying revenue, tempered by moderate capacity expansion.

“Overall, Asia-Pacific carriers as a group achieved commendable earnings in 2017 … underpinned by strong growth in both air passenger and cargo volumes and higher average load factors,” AAPA DG Andrew Herdman said. “[But] the region’s airlines continued to face significant headwinds [from] stiff competition and increased cost pressures from markedly higher fuel prices and rising labor costs.” Herdman noted the average operating margin for carriers was 6.6% for the year, with net profits just over $6 per passenger, a reflection of the highly competitive business environment.

Asia-Pacific carriers posted collective operating revenues of $176.6 billion in 2017, up 6.7% from $165.5 billion in 2016. Passenger revenue rose 6% to $135.6 billion. Passenger yields dipped 1% year-over-year (YOY) to 7.9 cents per RPK, a consequence of strong competition, AAPA said, but less severe than in previous years. International passenger traffic increased 8.6% YOY, reflecting more affordable fares growing travel destination and connectivity options, AAPA said.

A surge in trade activity boosted manufacturers output in the region, and air freight traffic responded with a 9.6% YOY rise in FTKs. Cargo revenue grew 14.6% to $18.6 billion.

Collective operating expenses in the region were up 8.7% to $165 billion, as fuel costs increased 19.6% to $40.6 billion, making up nearly a quarter of total expenses.

Herdman forecast continued “relatively robust” business activity for the Asia-Pacific region, driving increased consumer spending on passenger travel and air cargo demand.

“Asian airlines continue to evolve … implementing measures to increase efficiency and carefully control operating costs whilst seeking opportunities to maximize revenue.” Herdman said. “The ongoing expansion in the global economy bodes well for Asian airlines.”

Mark Nensel