INTERNATIONAL. The International Air Transport Association (IATA) has reported an acceleration in passenger demand growth in July over the previous five months.
Industry-wide traffic increased +5.9% year-on-year. International passenger demand rose +7.1%, which compares favourably to the +5.0% yearly increase in June.
Total revenue passenger kilometres (RPKs) rose +5.9%, with all regions reporting growth. Monthly capacity, measured in available seat kilometres (ASKs), increased +6.0%. Load factor was 83.7% – just 0.1 percentage point below the record July high achieved in 2015.
“July saw demand strengthen, after a softening in June,” said IATA Director General and CEO Alexandre de Juniac. “Demand was stimulated by lower fares which, in turn, were supported by lower oil prices. And near record high load factors demonstrate that people want to travel.
“But, there are some important sub-plots to the narrative of strong demand. Long-haul travel to Europe, for example, suffered in the aftermath of a spate of terrorist attacks. And the mature domestic markets are seeing demand growth stall while Brazil and Russia contract.”
Airlines in the Middle East posted the strongest growth in July, with a +13.1% year-on-year increase. Demand had dipped in June because of the timing of Ramadan. Capacity rose +15.5%, causing load factor to drop 1.7 percentage points to 78.6%.
Asia Pacific airlines recorded a +9.8% increase, with capacity up +8.6%. Load factor climbed 0.9 percentage points to 81.7%. IATA noted: “Reports suggest that Asian passengers are putting off traveling to Europe in favour of regional trips owing to terrorism fears. While traffic on Asia-Europe routes fell by -0.9% in June, international traffic within Asia rose +8.1%, which was a four-month high.”
Carriers in Europe saw July demand increase by +4.1%; the slowest among the regions. IATA said demand was affected by recent terrorist attacks as well as political instability in parts of the region. Traffic has grown at an annualised rate of just +1.4% since March. Capacity climbed +4.7% and load factor dipped 0.5 percentage points to 86.7%, which was still the highest among the regions.
Traffic at North American airlines rose +4.8%, with capacity up +5.1% and load factor down 0.3 percentage points to 86.1%. Seasonally adjusted volumes have risen at an annualised rate of more than +8% since March helped by transpacific and leisure traffic to Central America and the Caribbean, according to IATA.
Latin American airlines recorded growth of +7.5% as the upward trend in traffic resumed following a soft patch in the first quarter of 2016. Capacity increased +4.2%, boosting load factor 2.6 percentage points to 85.3%.
In Africa, airlines experienced a +7.4% increase in traffic but IATA said this related mainly to the strong upward trend in seasonally-adjusted traffic during the second half of 2015. Capacity rose +5.9%, and load factor climbed 1.0 percentage point to 72.4%, the lowest among the regions.
Domestic travel demand grew +3.8%, its slowest pace in 19 months. IATA noted that China and India are booming while more mature markets are stuck in neutral, and Brazil and Russia are sliding backwards. Domestic capacity climbed +3.7%, and load factor rose 0.1 percentage point to 84.0%.
“Passenger demand has broadly grown in line with the average of the past 10 years but the industry faces some potential headwinds, including lingering impacts from the series of terrorist attacks and the fragile economic backdrop,” concluded de Juniac.
“The environment in which aviation operates is dynamic—even volatile. Speed is of the essence. As an industry we must be prepared for rapid innovation in order to manage shocks and take advantage of opportunities as they arise.”