Strong Passenger Growth Continues: IATA

IATA -tyler_March13

The International Air Transport Association (IATA) reports global passenger traffic results for September showing demand growth of 5.3% (measured in revenue passenger kilometres or RPKs) over September 2013.

This continues the positive growth trend for passenger demand even though the performance was slightly below the August year-over-year rise of 6.3%. September capacity rose 5.1% and load factor rose 0.2 percentage points to 80.3%.

“Overall, demand for passenger travel is growing in line with expectations. We saw, however, some shifting of the sources of that growth in September, largely driven by economic factors. The strengthening of the US and Asian economies was offset by weakness in Europe and Latin America,” said IATA director general Tony Tyler (pictured).

“The three big stories in September were Europe, Russia and India,” added Tyler.

European airlines reported 3.9% growth for international demand. That’s a significant drop from the 7% reported in August indicating the impact of the Air France crew strike and a general weakening of European economic prospects.

Asia Pacific airlines reported September demand growth of 4.8% compared to a year-ago. Although this is a weaker rise than August, the recent trend has been positive and reflects better demand conditions in the region, including stronger trade activity that encourages business travel, Capacity climbed 7.2% and load factor dropped 1.7 percentage points to 76.2%.

European carriers recorded growth of 3.9% in September compared to a year ago, a significant slowdown on the August rise of 7%. Along with the impact of the 14-day Air France crew strike, this also reflects a lapse in the Eurozone economic recovery. Indicators show a weakening in key economies including Germany, owing to the Russia-Ukraine crisis and related sanctions, as well as a reversal in prior improvements in consumer confidence.

North American airlines saw international demand rise by just 2.1%. However, underlying trends in business activity are positive and growth in trade volumes has accelerated, boding well for business-related international travel. Capacity rose 3.8% and load factor slipped 1.4 percentage points to 82.4%.

“It’s an interesting time for the global air transport industry, highlighting the complex vulnerabilities of the business. The fall in the price of oil is a good example. It is good news for an industry that spends a third of its operating budget on fuel. The full impact of the price drop will only be realized over time because of a time lag built into jet fuel pricing. And it could even be an indicator of difficulties ahead if the fall is driven by declining demand for oil rather than rising supply capacity,” said Tyler.

He added, “There are a lot of risks out there – growing weakness in key economies such as Europe and Brazil, the potential threat of Ebola to public confidence in flying, and the impact of political instability in various parts of the world. The positive economic developments in Asia and the US continue to underpin profitability. But it is a delicate balancing act.”