Passenger demand rebounds and air freight shows modest growth in IATA’s latest monthly data shot

Latest data from the International Air Transport Association (IATA) paints a more positive performance for the industry in both the passenger and freight markets in Oct-2018. The impact of trade wars and economic headwinds remain troubling factors for the industry, similarly the political and economic impact of Brexit, but the recent easing of fuel prices has been a welcome development.


Summary:

  • Latest IATA performance metrics show global passenger demand grew +6.3% in Oct-2018, a rebound on last month. Capacity also climbed +6.3%;
  • Domestic demand rose +6.4% in Oct-2018, while international demand grew +6.3% delivering average monthly loads of 83.3% and 79.8% respectively;
  • Air freight demand rose (+3.1%) and capacity increased (+5.4%) as capacity growth outstripped demand growth for an eighth month.

The global passenger traffic results for Oct-2018 show demand (measured in revenue passenger kilometres, or RPKs) rose +6.3% compared to the same month last year. This marked a rebound from +5.5% growth recorded in Sep-2018, which was an eight-month low. Capacity also grew +6.3% and load factor was flat at +81.1%, matching last year’s record for the month.

IATA’s director general, Alexandre de Juniac, describes the healthy monthly performance as “reassuring” following the slower demand growth in September—some of which IATA says was attributable to weather-related disruptions. However, while the rise is positive, the bigger picture is that traffic growth has still moderated compared to earlier in the year, reflecting  what Mr de Juniac describes as “a more mixed economic backdrop and reduced demand stimulation from lower fares”.

In domestic markets passenger demand climbed +6.4% in Oct-2018 compared to Oct-2017, unchanged from September, while capacity rose +6.7%. Load factor slipped 0.2 percentage point to 83.3%. China (+12.2%), India (+15.0%) and Russia (+11.7%) led all markets with double-digit growth rates, the latter seeing its third consecutive month of double-digit domestic traffic growth.

Notably, Japan’s domestic demand also recovered after the significant typhoon-related disruptions in Sep-2018 caused traffic to decline -4.7% compared to a year ago with year-on-year growth of +1.7% in Oct-2018.

In International markets, Oct-2018 passenger demand rose +6.3% compared to the same month last year, up from +5.1% growth in Sep-2018. Airlines in all regions recorded gains, according to IATA. Total capacity climbed 6.1%, and load factor increased 0.1 percentage point to 79.8%.

  • European carriers’ October demand climbed +7.5%, which was the strongest growth among regions. Capacity rose +7.0% and load factor edged up 0.4 percentage point to 85.2%, again highest among regions.
  • Asia-Pacific airlines’ traffic rose +5.8% compared to the year-ago period. Capacity climbed +5.4% and load factor rose 0.3 percentage points to 78.9%.
  • Middle East carriers experienced a +4.4% rise in demand in October compared to last year, slowest among the regions for the seventh time in 12 months. Capacity increased +6.4%, and load factor slid 1.3 percentage points to 69.8%, lowest among regions.
  • North American airlines’ traffic climbed +5.6% in October compared to the year-ago period. Capacity rose +3.7% and load factor surged 1.4 percentage points to 80.4%.
  • Latin American airlines were the only carriers to experience a slowdown in growth as demand rose +5.9% versus +6.3% in September. Capacity climbed +9.1%, and load factor dropped 2.4 percentage points to 80.4%.
  • African airlines’ traffic grew +6.8% year-on-year in October. Capacity rose +5.5%, and load factor climbed 0.9 percentage point to 70.3%.

In the cargo sector, demand, measured in freight tonne kilometres (FTKs), rose +3.1% year-on-year in Oct-2018, reports IATA. This pace of growth was up from a 29-month low of +2.5% in Sep-2018. Freight capacity, measured in available freight tonne kilometres (AFTKs), rose by +5.4% year-on-year in Oct-2018. This was the eighth month in a row that capacity growth outstripped demand. All regions reported year-on-year demand growth during the month, except Africa which contracted.

“Cargo is a tough business, but we can be cautiously optimistic as we approach the end of 2018. Slow but steady growth continues despite trade tensions. The growth of e-commerce is more than making up for sluggishness in more traditional markets,” explains Mr de Juniac.