IATA: Asia Pacific regional air travel growth supported by strong domestic markets

    IATA published (25-Jul-2019) its Asia Pacific Regional Briefing for Jul-2019. Key regional highlights include:

    • General economic environment:
      • USChina trade tensions continued to weigh upon business environment in Japan in Jun-2019, mostly through country’s weaker exports;
      • In India and Indonesia, business sentiment eased amid weaker growth in new businesses and output;
      • Average crude oil and jet fuel price for Jun-2019 eased early in the month on economic growth uncertainty, then recovered later amid concerns about tighter oil supply. The average price hides “high data volatility”;
    • Regional air travel market:
      • Asia Pacific RPK growth in May-2019 (+4.5%) almost doubled compared to Apr-2019 (+2.4%), supported by improved performance in some domestic markets, but the rate remained well below that seen earlier in the year;
      • Growth in RPKs recovered sharply in India to 6%. Although it might take longer for the market to adjust to the recent Jet Airways demise, the long term outlook remains optimistic;
      • RPKs were almost 7% higher year-on-year in Japan, an outcome that reaffirms a recently observed strong upward trend in demand;
      • Despite a modest uptick in May-2019 (+1.1%), growth continues to trend sideways in Australia;
      • Across the key international markets, RPK growth was generally solid. The largest market, AsiaEurope, remained the best performer with volumes up by more than 10%;
      • Asia Pacific passenger load factor eased compared to Apr-2019, but 80.2% was a still a record high outcome for the month of May;
    • Regional freight market:
      • FTKs fell by more than 6%, partly reflecting the impact of tariffs and trade restrictions in the US-China trade dispute. Seasonally adjusted volumes have been rising modestly since Feb-2019;
      • Regional aggregate hides differences in performance at the international market level. Although volumes continued to decline in annual terms on AsiaNorth America and within Asia routes, growth recovered sharply to 2% in the largest Asia-Europe market;
      • Africa-Asia remained the fastest growing market, posting double digit growth (+12%) for the second consecutive month;
      • Freight load factor remained subdued at 52%, almost 4ppts lower;
    • Financial performance:
      • Asia Pacific carriers saw the most significant improvement in the EBIT margin of all regions for 1Q2019, up 1.2ppts;
      • Passenger yields showed mixed results across the region’s key markets. While India continued to post positive growth, Australia showed the opposite, with yields falling by 4%. Growth remained negative in most of the international markets with the ongoing exception of AsiaMiddle East (+15%);
    • Fleet:
      • Aircraft deliveries are scheduled to decline for Asia Pacific carriers in 2019 compared to 2018. 571 narrowbodies and 173 widebodies were delivered in 2018, compared to a forecast of 433 narrowbodies and 152 widebodies for 2019.