Global passenger traffic up +6.3% in 2016 thanks to strong second half, reports IATA

INTERNATIONAL. Global passenger traffic demand rose +6.3% in 2016, according to International Air Transport Association (IATA) figures, and +6.0% when adjusted for the leap year.

The association said the “strong” performance was well ahead of the ten-year average annual growth rate of +5.5%, but represented a slowdown from the “oil price-assisted” +7.1% increase recorded in 2015.

Demand is measured in revenue passenger kilometres (RPKs).

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IATA said the upward trend in seasonally-adjusted passenger traffic moderated during the first six months of the year. It attributed this to a “combination of headwinds” including terrorist attacks, political instability, and subdued economic activity.

However, the second half of the year saw an acceleration in the seasonally-adjusted passenger trend, with RPKs growing at an annualised pace of nearly +9% between June and December. The increase was driven by “a combination of passengers adjusting to the uncertain environment as well as a moderate upturn in the global economic cycle”.

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IATA reported a particularly strong performance in December with a +8.8% year-on-year rise in demand outstripping +6.6% capacity growth, representing a 10-month high. The Middle East, Asia Pacific and Europe posted double-digit annual growth rates, but North American airlines lagged behind for the third consecutive month (3.1%).

According to IATA, one of the main uncertainties for 2017 is the extent that lower airfares will stimulate demand. “Yields have continued to trend downwards during the second half of 2016, and this is another factor that will have helped to support demand growth. But with oil prices currently around twice their 12-year low-point reached in January 2016, the biggest stimulus to demand from lower airfares may have passed,” the association wrote in its ‘Air Passenger Market Analysis’ for December.

“All told, the strength of the economic cycle will play a key role in determining the pace of passenger traffic growth in 2017. In any case, given the robust end to 2016, even if we were to see no further increase in seasonally-adjusted traffic throughout all of 2017, full-year RPK growth would still be in the region of +4-4.5%.”

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IATA Director General and CEO Alexandre de Juniac said of the 2016 performance: “Air travel was a good news story in 2016. Connectivity increased with the establishment of more than 700 new routes. And a US$44 fall in average return fares helped to make air travel even more accessible.

“As a result, a record 3.7 billion passengers flew safely to their destination. Demand for air travel is still expanding. The challenge for governments is to work with the industry to meet that demand with infrastructure that can accommodate the growth, regulation that facilitates growth and taxes that don’t choke growth. If we can achieve that, there is plenty of potential for a safe, secure and sustainable aviation industry to create more jobs and increase prosperity.”

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International passenger traffic rose +6.7% in 2016. Capacity increased +6.9% and load factor fell 0.2 percentage points to 79.6%. All regions recorded year-over-year increases in demand.

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IATA Director General and CEO Alexandre de Juniac: “There is plenty of potential for a safe, secure and sustainable aviation industry to create more jobs and increase prosperity”

In Asia Pacific growth was +8.3%, the second-fastest increase among the regions. This pace is “considerably ahead” of the five-year growth average of +6.9%, IATA said.

Demand rose +4.8% in Europe in 2016. Carriers in the region particularly benefitted from an improvement in the second half of the year, with passenger volumes increasing at an average of +15% year-over-year since June, “easily compensating for a slight decline over the first six months of 2016”, IATA noted.

In North America demand rose +2.6%. Most of the growth occurred in the second quarter, and traffic has been strongest on Pacific routes, IATA said. The North Atlantic, by contrast, has been “fairly flat”.

Middle East carriers had the strongest regional annual traffic growth for the fifth year in a row. RPKs expanded +11.8%, consolidating the region’s position as the third-largest market for international passengers.

International traffic was up +7.4% in Latin America. IATA noted that the overall situation in the region was “very healthy despite some economic and political uncertainty in the region’s largest market, Brazil”.

African airlines had their best growth performance since 2012, up +7.4%. Growth is being underpinned by strong demand on routes to and from Asia and the Middle East.

Domestic air travel rose +5.7% globally in 2016. All major markets except Brazil showed growth, but India and China, with RPK expansion of +23.3% and +11.7% respectively, were the stand-out performers. “These markets have been underpinned by additional routes and increasing flight frequencies, with the latter looking set to continue in 2017,” commented IATA.

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