The International Air Transport Association (IATA) has released the global passenger traffic results for Jul-2017, identifying that global traffic grew 6.8% year-on-year, while capacity climbed 5.5%, and load factor edged up 0.5 percentage points to 84.6%. Despite this, growth slowed compared to the 7.6% increase recorded in Jun-2017.
IATA DG and CEO Alexandre de Juniac believes the record high global average load factor achieved in Jul-2017 is evidence that “the appetite for air travel remains very strong”. Mr de Juniac cautioned that the stimulus effect of lower fares is “softening in the face of rising cost inputs”, which “suggests a moderating in the supportive demand backdrop”.
Key highlights of the results include:
- Europe – traffic up 7.5%, lowered from 8.8% in Jun-2017. Capacity rose 5.9%, and load factor climbed 1.3 ppts, to 88.7%, which was the highest among the regions. The economic backdrop in Europe has strengthened. However, on a seasonally-adjusted basis, the upward growth in travel demand has moderated sharply since Feb-2017.
- Asia Pacific – traffic up 5.9%, a deceleration compared to Jun-2017 growth of 8.8%. As with Europe, carriers in the Asia Pacific region are experiencing a slowing of demand growth. Capacity increased 6.7%, and load factor slipped 0.6 ppts to 81.0%.
- Middle East – traffic up 4.5% (an acceleration from the 3.6% in Jun-2017) but was still well off the region’s five-year average pace of 11.2%. Capacity grew 3.6% and load factor rose 0.7 ppts, to 81.5%. Middle East-North America market has been affected by a combination of factors in 2017, including the recently 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 Middle East-US route was already slowing in early 2017, in line with the moderated pace of expansion of nonstop services by the largest Middle Eastern airlines.
- North America – traffic up 3.5%, lowered from 4.4% growth in Jun-2017 but still ahead of the regional five-year average pace (2.9%). Capacity rose 3.8% and load factor slipped 0.3 ppts, to 85.9%. Outbound travel is being supported by the relatively solid economic backdrop in North America, however, anecdotal evidence suggests that inbound demand is being negatively influenced by the additional security measures in place for travel to the US.
- Latin America – traffic up 10.5%, the strongest growth among regions. Capacity increased 10% and load factor climbed 0.4 percentage points, to 84.9%. International volumes between North and Central America continue to trend strongly upward, and traffic on the North-South America market segment has also started to trend upwards, in part helped by the healthier – albeit still fragile – economic backdrop in Brazil.
- Africa – traffic up 6.5%, lowered from 9.8% demand growth in Jun-2017. Capacity rose 1.7%, and load factor jumped 3.4 ppt to 74.1%. Conditions in the region’s two largest economies continue to diverge, with South Africa in recession while business confidence levels are at a two-year peak in Nigeria.
India was the second fastest-growing domestic aviation market in Jul-2017, with China overtaking India during the month. However, domestic India traffic slowed to 12.5% in Jul-2017, its slowest pace since Nov-2014. However, IATA noted that a very strong month-on-month increase in seasonally adjusted traffic in Jul-2017 has meant that annual traffic growth “managed to remain in double digits for the 35th consecutive month”.
IATA noted: “In fact, having slowed in the opening months of 2017, the strong upward seasonally adjusted traffic trend looks to have reasserted itself in recent months”.
The exception to the rule
Domestic traffic in Australia declined 0.8% year-on-year in Jul-2017, with a 1.9% decline in capacity. As a result, load factor increased 0.9ppts to 80.1%, the first time since 2009 that the July load factor has come in above 80%.