Latest monthly metrics from the International Air Transport Association (IATA) for the global passenger and cargo airline market show a mixed performance from the two sectors. The data for Mar-2018 shows demand accelerating and loads reaching new record levels for passenger airlines, but for cargo carriers it is a different story with a modest rise in demand its slowest rate of growth in 22 months.
- Latest IATA performance metrics show global passenger demand grew at its fastest rate in 12 months with revenue passenger kilometers (RPKs) up +9.5%;
- Domestic demand rose +7.8% in Mar-2018, while international demand grew +10.6% delivering average monthly loads of 84.0% and 81.5% respectively;
- Air freight growth fell to its latest year-on-year rate of growth in 22 months in Mar-2018 with freight tonne kilometres (FTKs) rising just +1.7%;
- All regions except Latin America (+15.5% versus last year) reported year-on-year declines in air freight growth in Mar-2018, with Africa in negative territory.
In the passenger market global passenger traffic demand (measured in revenue passenger kilometres, or RPKs) rose +9.5%, compared to the same month a year ago, the fastest pace in 12 months. Capacity (available seat kilometers, or ASKs) grew +6.4% and load factor climbed 2.3 percentage points to 82.4%, which set a record for the month, following on the record set in February. All regions except for the Middle East posted record load factors.
“Demand for air travel remains strong, supported by the comparatively healthy economic backdrop and business confidence levels,” says Alexandre de Juniac, IATA’s director general and CEO, IATA. “But rising cost inputs—particularly fuel prices—suggest that any demand boosts from lower fares will moderate going into the second quarter.”
“Benign economic conditions are supporting—and being supported by—good demand for air travel. It’s a mutually-beneficial effect that smart governments recognise and encourage, by embracing affordable, quality aviation infrastructure and reasonable commercial regulation.”
Alexandre de Juniac, IATA’s director general and CEO, IATA
Domestic demand rose +7.8% in Mar-2018, which was a slight deceleration from +8.2% growth recorded in Feb-2018 and was driven primarily by developments in the US market, according to IATA. Domestic capacity climbed +6.2%, and load factor lifted 1.3 percentage points to 84.0%. This slowdown mainly reflected an expected deceleration in domestic United States of America (USA) RPKs (to +4.7% year-on-year from +6.1%).
International passenger demand rose +10.6% in Mar-2018 compared to the same month last year, which was up from +7.4% year-over-year growth recorded in Feb-2018. All regions showed strong increases. Total capacity climbed +6.6%, and load factor improved 2.9 percentage points to 81.5%.
- Asia-Pacific airlines’ traffic soared +11.6% in Mar-2018 compared to the year-ago period. Capacity increased +8.2%, and load factor rose 2.5 percentage points to 80.9%.
- European carriers saw Mar-2018 traffic climb +9.8% over year-on-year, up from +6.9% annual growth in Feb-2018. Capacity rose +6.4% and load factor was up 2.6 percentage points to 84.6%, highest among regions.
- Middle East carriers’ traffic jumped +10.7% in Mar-2018, much improved from the +4.1% year-over-year increase recorded in Feb-2018. Capacity increased +4.3% and load factor jumped 4.4 percentage points to 76.7%.
- North American airlines posted a +9.5% traffic rise in Mar-2018 compared to the year-ago period, well above the 5-year average growth rate of +3.6%. Capacity climbed 4.9% and load factor was up 3.5 percentage points to 83.5%, which was the second highest among the regions.
- Latin American airlines had an +11.8% increase in Mar-2018 traffic, which was the largest increase among the regions for a third month in a row. March capacity climbed +10.0% compared to a year ago, and load factor edged up 1.3 percentage points to 81.8%.
- African airlines continued to enjoy very strong demand as well, with traffic up +11.2% compared to Mar-2017, which was more than twice the five-year average pace of +4.8%. Capacity climbed +6.7%, and load factor strengthened 2.9 percentage points to 71.0%.
Air freight demand grows, but slows
Global air freight demand, measured in freight tonne kilometers (FTKs), rose +1.7% in Mar-2018, compared to the same period the year before. This was five percentage points lower than the February result and the slowest pace of growth in 22 months. The year-on-year increase in capacity, measured in available freight tonne kilometers (AFTK) fell to +4.4% compared to +6.3% in Feb-2018. This was the first time in 20 months, however, that annual capacity rose faster than demand.
IATA says the sharp growth slowdown is principally due to the end of the restocking cycle, during which businesses rapidly increased their inventory to meet unexpectedly high demand. A softening of global trade is also evident, but it remains optimistic that air cargo demand will grow by 4-5% this year despite some obvious headwinds.
“Oil prices have risen strongly, and economic growth is patchy,” says de Juniac, but he warns that the biggest damage could be political. “The implementation of protectionist measures would be an own-goal for all involved—especially the US and China,” he says.
All regions except Latin America reported year-on-year declines in growth in Mar-2018, with Africa in negative territory. African FTKs fell by -3.4% in Mar-2018, but IATA notes this may be influenced by the comparison with unusually strong growth in Mar-2017 and may not necessarily suggest this is the start of a negative trend.
Asia-Pacific carriers reported FTK growth of just +0.7%, Middle East carriers saw growth of +0.8%, European airlines FTKs rose +1.0%, while North American carriers’ freight volumes expanded +3.9% compared to the same period a year ago. The Latin American carriers’ performance was the clear standout with growth of +15.5% in Mar-2018 as freight volumes in the region continue to recover, buoyed in part due to the better performance of the Brazilian economy.