Despite rising costs, things are looking up for the airline industry.The International Air Transport Association (IATA) forecasts global airlines' net profit to reach $38.4 billion in 2018, up considerably from $34.5 billion during 2017.The industry is expected to see a 9.4 percent rise in overall revenues to $824 billion next year along with a 6 percent jump in passenger numbers to 4.3 billion. Average net profit per departing passenger is projected to climb from $8.45 to $8.90 in 2018.While IATA expects improved profitability across all regions, North America will continue to lead the way, generating net gains of $16.4 billion.MORE Airlines & AirportsNet profit for Europe and Asia is expected to rise to $11.5 billion and $9 billion, respectively. Latin American airlines should see a $200 million jump in earnings next year while the Middle East is projected to report a doubling in net gains from $300 million during 2017 to $600 million in 2018 in spite of travel restrictions and regional conflict."These are good times for the global air transport industry. Safety performance is solid. We have a clear strategy that is delivering results on environmental performance. More people than ever are traveling," said IATA's Director General and CEO, Alexandre de Juniac in a statement."The demand for air cargo is at its strongest level in over a decade. Employment is growing. More routes are being opened. Airlines are achieving sustainable levels of profitability."De Juniac points out that airlines still face cost challenges in rising fuel prices, labor and infrastructure expenses.IATA anticipates jet fuel prices will increase to $73.8 per barrel next year, up 12.5 percent from $65.6 per barrel in 2017. Meanwhile, rising labor costs are expected to account for 30.9 percent of airlines' total costs during 2018.READ MORE: Airlines Making Bank With Add-on Charges"The industry also faces longer-term challenges. Many of them are in the hands of governments. To continue to deliver on our full potential, governments need to raise their game—implementing global standards on security, finding a reasonable level of taxation, delivering smarter regulation and building the cost-efficient infrastructure to accommodate growing demand," De Juniac added."The benefits of aviation are compelling—2.7 million direct jobs and critical support for 3.5 percent of global economic activity."According to IATA, the aviation industry's impact on tourism and the economy overall will continue to be profound in 2018. After all, international tourists traveling by air are projected to spend more than $750 billion next year, which marks a 15 percent increase in just over two years.Follow @_Pat_Clarke