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Healthy Passenger Demand Continues

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The International Air Transport Association (IATA) reports global passenger traffic results for November 2014 showing a continuation of the healthy demand trend of recent months.

Total revenue passenger kilometres (RPKs) rose 6% compared to November 2013, which was ahead of the 5.7% year-over-year growth recorded in October, as well as the 10-year average growth rate of 5.6%. November capacity expanded by 5.4%, leading to a 0.5 percentage point rise in the load factor to 76.7%.

Growth was driven primarily by domestic markets which experienced a 6.9% increase in demand over the previous November (an acceleration over the 5.3% year-to-date average for domestic travel). Chinese domestic travel (which rose 15.4% over the previous November) was the main contributor to this growth. International travel, meanwhile, experienced a slight deceleration in growth towards the end of the year.

“November demand was healthy, but the overall picture is mixed. For example, strong traffic performance within China and India has not carried over into international demand for Asia-Pacific carriers. And while lower oil prices should be positive for economic activity, softening business confidence is having a dampening effect on international travel,” said IATA director general Tony Tyler.

North American airlines saw demand rise 2% over the 2013 period. This was an improvement over growth of 1.6% in October. November capacity rose 3.1%, causing load factor to fall 0.8 percentage points to 76.8%.

Aviation is a vital driver of the global economy. Last month IATA issued an updated outlook forecasting industry earnings of $25 billion in 2015. While this appears large, at the global level, on revenues of $783 billion, a $25 billion profit represents a margin of just 3.2% or around $7 per passenger. And it is spread over a highly fragmented and hyper-competitive industry with many hundreds of players, some of whom are making sustainable returns and many of whom are struggling.

“Nonetheless, the industry is investing to improve the passenger experience. This year we expect to see some implementation of the New Distribution Capability, giving travellers the ability to view and purchase all of an airline’s products and services wherever they shop for air travel. And more passengers will have access to Fast Travel options such as self-boarding and self-tagging of luggage that offer convenience and time-savings and give them greater control over their journey,” added Tyler.

 

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