Latest global passenger traffic statistics from the International Air Transport Association (IATA) for Aug-2017 show that demand (measured in total revenue passenger kilometres or RPKs) climbed 7.2% compared to the year-ago period. At the same time, the upward trend in seasonally-adjusted traffic has eased from that seen at the end of 2016. August capacity (available seat kilometres or ASKs) increased by 6.3%, and load factor climbed 0.7 percentage points to 84.5%, which was just below the record for the month set in 2015.
“Following the strong summer traffic season in the Northern hemisphere, 2017 is on course to be another year of strong traffic growth,” says Alexandre de Juniac, director general and chief executive officer, IATA. However, some important demand drivers are easing, particularly lower fares. “As we head towards the end of the year we still expect growth to continue, but potentially at a slower pace,” he adds.
August international passenger demand rose 7.0% compared to August 2016, according to the IATA report with all regions recording increases, led by airlines in Latin America. Capacity climbed 6.1%, and load factor edged up 0.8 percentage points to 84.5%. Looking at each region individually, IATA notes that…
- European carriers saw August demand climb 6.9% year-to-year, which was a slowdown from the 7.9% growth recorded in July. International traffic on routes within Europe has slid in recent months, in seasonally-adjusted terms, despite a strengthening regional economic backdrop. Traffic conditions on the Europe-Asia route have also softened on a seasonally-adjusted basis. Capacity rose 5.5%, and load factor climbed 1.2 percentage points to 88.3%, which was the highest among regions.
- Asia-Pacific airlines’ August traffic increased 8.6% compared to the year-ago period, which was an acceleration compared to the 6.6% rise in July. However, the same trend of softening demand growth on routes within the region was apparent. Capacity rose 8.3% and load factor inched up 0.2 percentage points to 81.4%.
- Middle Eastern carriers posted a 5.5% traffic increase in August, well below the five-year average pace of 11.1%. The Middle East-to-North America market in particular has been hit by a combination of factors, including the now lifted cabin ban on large portable electronic devices, as well as a wider impact from the proposed travel bans to the US. Traffic growth on the segment was already slowing in early-2017, in conjunction with an easing in the pace of growth of nonstop services flown by the largest Middle Eastern airlines. Capacity increased 5.1%, with load factor rising 0.3 percentage points to 81.4%.
- North American airlines’ international demand rose 5.5% compared to August a year ago, up from 4% growth recorded in July and nearly double the five-year average of 3.1%. However, there are signs that inbound travel to the US is being negatively-impacted by the additional security measures now involved with travelling there. Capacity rose 3.9%, and load factor grew by 1.4 percentage points to 86.6%.
- Latin American airlines experienced a 9.3% demand increase in August compared to the same month last year. Although this was down from the 11.1% increase in July, it was still the strongest performance among regions. Capacity increased by 10.1% and load factor slid 0.6 percentage points to 82.7%, making the region the only one to see a decline in load factor. Traffic on the North-South America route has recovered in recent months, helped in part by signs of ongoing recovery in Brazil, the region’s largest economy. Meanwhile, international RPKs flown between North and Central America, as well as within South America, have also continued to trend strongly upwards.
- African airlines’ traffic climbed 6.4% in August. The continent’s two largest economies, Nigeria and South Africa, both exited from economic recessions during the second quarter of the year. Nonetheless, seasonally adjusted traffic has broadly tracked sideways so far this year. Capacity rose 3.4%, the smallest increase among regions, and load factor surged 2.1 percentage points to 75.7%.
IATA notes that the latest data once again shows that the upward trend in seasonally adjusted passenger traffic has eased from that seen towards the end of last year. Indeed, industry-wide RPKs were trending upwards at a double-digit annualised pace coming into 2017, but this has now slowed to a more moderate pace in the region of 6%.
This moderation has in part reflected a reduced degree of stimulus to demand from lower airfares, says IATA. Admittedly, passenger yields in July 2017 were only slightly higher than they were in the same month in 2016 (0.1% when adjusting for potential distortions from exchange rate movements); in fact, adjusting for inflation, the price of air travel still became relatively cheaper than other goods and services over the period. However, passenger yields have clearly now began to trend upwards, albeit modestly, notes IATA.