Latest monthly metrics from the International Air Transport Association (IATA) for the global passenger and cargo airline market show another month of mixed performance from the two sectors.. The data for Apr-2018 shows demand growth slipping, but loads reaching new record levels for passenger airlines, while cargo carriers so a much improved performance versus last month where a modest rise in demand was its slowest rate of growth in 22 months.
- Latest IATA performance metrics show global passenger demand grew +6.2% in Apr-2018 as the timing of Easter has a clear impact on monthly figures versus last month’s annual high;
- Domestic demand rose +8.5% in Apr-2018, while international demand grew +4.8% delivering average monthly loads of 84.0% and 81.4% respectively;
- Air freight recorded strong demand (+4.1%) and capacity (+5.1%) growth, only the second time in 21 months that capacity growth outstripped demand growth;
- All regions reported monthly growth on 2017 freight levels, albeit at different levels of expansion. Latin America remains the standout market with only double-digit rise.
In the passenger market global passenger traffic demand (measured in revenue passenger kilometres, or RPKs) rose +6.2% compared to Apr-2017, which was down from a 12-month high of 9.7% in Mar-2018. Comparisons with the year ago period where obviously impacted by the comparatively late timing of Easter in 2017, which boosted April traffic. April capacity (available seat kilometres or ASKs) increased by +5.9%, and load factor climbed 0.2 percentage point to 82.3%, which was a record for the month of April, surpassing last year’s record of 82.1%.
“Demand for air transport continues to be above the long-term trend. However, increases in airline cost inputs, most notably fuel prices, means that we are unlikely to see increased stimulation from lower fares in 2018, compared to previous years,” warns Alexandre de Juniac, IATA’s director general and CEO.
Demand for domestic travel climbed +8.5% in Apr-2018 compared to last year, propelled by double-digit annual growth in India (double-digit annual growth (26.4%) for the 44th consecutive month) and China, Capacity increased +7.6%, and load factor rose 0.7 percentage point to 84.0%. All markets reported demand increases with stand out performers also including Australia where domestic traffic increased +3.4% year-on-year – a slowdown from March, but still well above the five-year average pace of +1.6%.
During the month international passenger demand rose +4.8% compared to Apr-2017. All regions recorded year-over-year traffic increases but all were behind the pace of growth reported in March. Total capacity climbed +4.9%, and load factor slipped 0.1 percentage point to 81.4%.
- Asia Pacific carriers posted an +8.5% traffic rise in April, strongest among the regions and the first time since Dec-2017 that Asia-Pacific airlines led in growth. Capacity rose +7.6% and load factor improved 0.6 percentage point to 81.0%.
- Middle East carriers saw demand rise +4.1% in April. Capacity climbed +3.2% and load factor rose 0.7 percentage point to 77.2%.
- European airlines witnessed an April traffic increase of +3.4% compared to the year-ago period. While this was down compared to the +9.8% year-over-year growth recorded in March, demand picked up in April in seasonally-adjusted terms. Capacity rose +4.0% and while load factor dipped 0.5 percentage point to 84.6%, it still was highest among the regions.
- North American airlines posted a +0.9% demand increase compared to April a year ago, which was sharply down compared to the +9.5% growth experienced in March. Capacity climbed +2.4%, and load factor fell 1.2 percentage points to 80.7%.
- Latin American airlines experienced a +6.4% rise in April demand compared to the same month last year. Capacity rose +7.5% and load factor slipped 0.8 percentage point to 81.4%.
- African airlines recorded a +5.1% traffic increase in April. Capacity rose +4.6%, and load factor edged up 0.4 percentage point to 72.8%.
Air freight demand recovers from last month’s low
IATA reports that global air freight demand, measured in freight tonne kilometres (FTKs), rose +4.1% in Apr-2018, compared to last year. This is up from the +1.8% growth in annual demand recorded in Mar-2018. Freight capacity, measured in available freight tonne kilometres (AFTKs), grew by +5.1% year-on-year, marking only the second time in 21 months that capacity growth outstripped demand growth.
After a sharp fall in March 2018, to a 23-month low, global air freight volumes recovered slightly in April 2018. The pace at which demand is growing, however, remains significantly slower than in much of 2017, notes IATA.
The weaker growth in air cargo is primarily due to the end of the restocking cycle, during which businesses rapidly increase their inventory to meet unexpectedly high demand. This is consistent with demand drivers moving away from the highly supportive levels seen last year, highlights IATA.
The Purchasing Managers’ Index (PMI) for manufacturing and export orders fell in Apr-2018 to its lowest level since 2016. A softening of global trade is also evident, says IATA, with containerised freight demand slowing in tandem with air freight demand. Seasonally-adjusted freight volumes continue to track sideways.
“We remain cautiously optimistic that demand will grow in the region of +4% this year,” says Me de Juniac. But the forecast appears to have increasing downside potential. “Oil prices continue to rise as does protectionist rhetoric. Borders open to people and to trade drive economic growth and social prosperity. We are all disadvantaged when they are closed,” he adds.
All regions reported growth on 2017 freight levels, albeit at different levels of expansion. Asia-Pacific carriers reported FTK growth of +3.9%, Middle East carriers saw growth of +7.3%, European airlines FTKs rose +2.4%, African carriers saw an FTK increase of +5.6%, while North American carriers’ freight volumes expanded +3.2% compared to the same period a year ago. The Latin American carriers’ performance was again the clear standout with growth of +10.6% in Apr-2018 as freight volumes in the region continue to recover, buoyed in part due to the better performance of the Brazilian economy.