Air Passenger Demand Growth Slows – IATA

Globally, IATA said the passenger traffic data for June showed that demand (measured in revenue passenger kilometres or RPKs) rose by 5.2% compared to the year-ago period.

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However, the International Air Transport Association (IATA) said upward momentum had weakened in the face of moderate economic growth and the impact of terrorism. IATA represents about 260 airlines making up 83 percent of global air traffic. United Continental Holdings Inc., American Airlines Group Inc. and Delta Air Lines Inc. are among carriers that in recent weeks announced they are trimming growth plans to try to curb the overabundance of flights and seats. Year-to-date, total market capacity is up 6.2% year-over-year (YOY), with a total passenger load factor of 79.2%.

“African airline trafficclimbed 4.7% in June, an indication that the strong upward trend in demand that began in the second half of 2015 has paused”. While demand tends to recover reasonably quickly after such events, the repeated nature of the attacks may have a more lasting impact. The Brexit vote is expected to continue to weigh on the market in coming months, the group said. The upward trend has flattened since, with June passenger volumes “barely higher” than in February. This could be a natural pause, but possibly is also a sign of Asian passengers being put off travel by terrorism in Europe. In Brazil however, domestic air traffic declined 6.5%. Capacity rose 7.3 percent and load factor inched up 0.6 percentage points to 78.2 percent. The Middle East and Europe posted the fastest demand growth in June with year-on-year increases of 8.0 and 5.1 per cent respectively.

The demand in the Middle East was well down on the double-digit growth recorded earlier in the year. Annual growth in RPKs ticked up to 5.2% in June, from an upwardly-revised 4.8% in May. Capacity rose +7.4%, with the result that load factor slipped 1.7 percentage points to 64.4%; the lowest among regions.

In terms of domestic markets, India’s demand surge shows no sign of abating, following a 23.3% jump in domestic traffic in June. Capacity climbed 3.4 percent and load factor slipped 1.1 percent percentage points to 83.3 percent.

“Demand for travel continues to increase, but a slower pace”, IATA DG and CEO Tony Tyler said.

With the largest domestic passenger travel market in the world-a 15.4% share-US carriers had 4.5% YOY growth in June, almost even with May’s 4.4% growth.

Demand for air freight rose 4.3 per cent in June, the fastest rate for 14 months, according to the IATA.

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According to Tyler, aviation and related tourism delivers $2.7trn in economic impact and supports around 62.7m jobs worldwide. More generally, the fragile and increasingly uncertain global economic backdrop continues to present a headwind to passenger demand as well.

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