Monthly demand data from the International Air Transport Association (IATA) shows global passenger traffic started 2018 at its slowest year over year growth rate in nearly four years, although external factors contributed to the weaker performance. Total revenue passenger kilometers (or RPKs) rose +4.6% in Jan-2018 versus the same month last year, according to IATA, but the later timing of the Lunar New Year in 2018 as well as less favourable comparisons with the strong upward trend in traffic seen in late 2016-early 2017 impact the performance.
IATA estimates the impact of the later Lunar New Year-related travel period holiday represented around two-fifths of the slowdown in year-over-year growth for the month. January capacity (available seat kilometers or ASKs) rose +5.3%, and load factor slipped half a percentage point to 79.6%.
Alexandre de Juniac, IATA’s director general and CEO says that despite the slower start “economic momentum is supporting rising passenger demand” in 2018, but warns concerns over a possible trade war involving the US could have a “serious dampening effect” on global market confidence, spilling over into demand for air travel.
Domestic Passenger Markets
Domestic traffic climbed +5.1% in Jan-2018 year over year, down from +7% growth recorded in Dec-2017. IATA says the slowdown is “entirely attributable” to the later Lunar New Year holiday period in 2018. All markets showed growth, led by India, which experienced its 41st consecutive month of double-digit traffic increases. Domestic capacity increased +5.3% and load factor slid 0.2 percentage point to 79.8%.
International Passenger Markets
International passenger demand growth slowed to +4.4% in Jan-2018, from +6.1% in Dec-2017, with all regions recording growth, led by Latin America and Europe. Capacity rose +5.3% and load factor dipped 0.7 percentage point to 79.6%.
- Asia-Pacific carriers recorded a demand increase of +4.6% compared to Jan-2017, which was a 46-month low. Capacity rose +6.1%, and load factor dropped 1.2 percentage points to 80.4%.
- European carriers’ international traffic climbed +6.0% in Jan-2018 compared to the year-ago period, up from +5.8% growth in Dec-2017. The region was the only one to see an acceleration in traffic compared to the prior month. Capacity rose +5.0% and load factor was up 0.7 percentage point to 80.8%.
- Middle East carriers had the weakest growth, with demand up just +0.5% compared to Jan- 2017, the slowest pace since Sep- 2008. Capacity climbed +4.6% and load factor fell 3.1 percentage points to 76.8%.
- North American airlines experienced a +3.5% rise in traffic over a year ago, but capacity rose +4.3% and load factor dipped 0.7 percentage point compared to a year ago to 79.6%.
- Latin American airlines’ traffic climbed +7.3% in Jan-2018 compared to Jan- 2017, strongest among all the regions. Capacity rose +8.2%, however, and load factor slipped 0.7 percentage point to 82.6%, though still the highest among the regions.
- African airlines saw January traffic rise +4.9% against a mixed backdrop for the region’s largest economies. The region’s capacity rose +4.2%, and load factor edged up 0.5 percentage point to 70.3%.
‘Robust’ freight demand
Global air freight demand, measured in freight tonne kilometers (FTKs), rose +8.0% in Jan-2018 compared to the year-earlier period. This was up from the +5.8% annual growth recorded in Dec-2017. Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by +4.2% year-on-year.
The continued positive momentum in freight growth into 2018 reflects that demand drivers for air cargo remain supportive. Global demand for manufacturing exports is buoyant and meeting this strong demand is leading to longer supply chain delivery times.
IATA predicts demand for air cargo “may strengthen” as a result, with companies seeking faster delivery times to make up for longer production times, but expects demand for air cargo “to taper to a more normal +4.5% growth rate” for the full year. A geographical breakdown of its data shows all regions reported an increase in demand in January 2018.
- Asia-Pacific airlines saw demand in freight volumes grow +7.7% in Jan-2018 and capacity increase by +2.2%, compared to the same period in 2017.
- North American airlines’ freight volumes expanded +7.5% in Jan-2018 year-on-year, as capacity increased +4.2%.
- European airlines posted a +10.5% increase in freight volumes in Jan-2018. Capacity increased +5.3%. Seasonally-adjusted volumes jumped +3% in month-on-month terms in January – the largest increase since March 2017.
- Middle Eastern carriers’ freight volumes increased +4.4% year-on-year in Jan-2018, the slowest growth of all regions. Capacity increased +6.3%.
- Latin American airlines experienced a growth in demand of +8.0% in Jan-2018. Capacity increased +5.4%. Seasonally-adjusted international freight volumes are now back to the levels seen at the end of 2014.
- African carriers’ saw freight demand increase by +12.9% in Jan-2018 compared to the same month last year. The increase was helped by very strong growth on the trade lanes to and from Asia.