Robust global passenger demand continues: IATA
The International Air Transport Association (IATA) announced global passenger traffic results for July showing robust demand growth compared to July 2014 for both domestic and international traffic.
Total revenue passenger kilometres (RPKs) rose 8.2%, which was an improvement on the June year-over-year increase of 5.5%. July capacity (available seat kilometres or ASKs) increased by 6.5%, and load factor rose 1.4 percentage points to 83.6%. Results were given a boost by the timing of Ramadan which fell partly in July this year but took place mostly in July in 2014. The holy month tends to subdue demand for air travel.
“July results were strongly positive but slowing global trade and the wild gyrations of stock exchanges around the globe suggest that we may be in for some turbulence in coming months,” said Tony Tyler, IATA’s Director General and CEO.
International Passenger Markets
July international passenger demand rose 8.6% compared to the same month in 2014, with airlines in all regions recording growth, including Africa for the first time this year. Total capacity climbed 6.5%, pushing load factor up 1.6 percentage points to 83.5%.
Asia-Pacific airlines saw July traffic increase 8.5% compared to the year-ago period. Capacity rose 6.5% and load factor climbed 1.5 percentage points to 80.3%. The strong performance occurred despite notable declines in trade as well as slower than expected growth in China.
European carriers’ demand increased by 6.7%, reflecting economic recovery in the Eurozone, while capacity climbed 4.0% and load factor rose 2.2 percentage points to 87.3%, highest among the regions.
North American airlines’ traffic rose 5.3% compared to July a year ago, which was more than double the 2.6% rise achieved in June year over year. Capacity climbed 3.5% and load factor rose 1.4 percentage points to 86.5%. Expectations for better economic performance are supporting travel demand.
Middle East carriers experienced a 19.8% demand surge in July over the same month in 2014 buoyed by the timing of Ramadan. Capacity rose 17.7% and load factor climbed 1.5 percentage points to 79.6%.
Latin American airlines’ July traffic climbed 8.5% compared to July 2014. Capacity increased by 8.0% and load factor rose 0.4 percentage points to 82.7%. Despite recessionary conditions in Brazil and Argentina trade volumes in the region showed strong improvement during the first half of the year, providing a boost to business-related international travel.
African airlines’ traffic moved into positive territory for the first time this year, rising 4.9% in July over July 2014. However, the result could be owing to volatility in reported volumes, as fundamental economic drivers remain weak. Capacity rose 3.9%, with the result that load factor improved 0.6 percentage points to 70.9%.
Domestic Passenger Markets
Domestic travel demand rose 7.6% in July compared to July 2014. All markets showed growth with the strongest increases occurring in India and China. Domestic capacity climbed 6.5%, and load factor improved 0.8 percentage points to 83.6%.
India’s domestic demand soared 28.1% in July compared to a year ago likely owing to significant increases in service frequencies and improvements in economic growth.
China domestic traffic climbed 10.9% year-over-year. Recent developments in the Chinese economy, including deep declines in the country’s stock exchange, have increased concerns about a further slowdown in the economy.
The Bottom Line: “Following a strong summer the outlook heading into autumn is unsettled to say the least. While passenger demand remains healthy, air cargo growth turned negative in July. The downward movement in stock markets around the globe reflects investors’ growing concerns about slowing trade and economic growth in emerging economies, as well as China’s continued shift towards domestic markets. Aviation’s connectivity creates economic opportunities and contributes to job creation. Governments looking to shore up consumer confidence and encourage spending should be encouraging greater connectivity by removing barriers to growth such as heavy taxes and charges and infrastructure constraints,” said Tyler.