TravelNewsAsia.com

IATA Reports Robust Air Passenger Growth in June 2013

Travel News Asia Latest Travel News Podcasts Videos Thursday, 1 August 2013
 

IATA's June 2013 passenger demand figures show year-on-year growth of 6.0%.

The robust growth, measured in revenue passenger kilometers (RPK), is ahead of the 4.8% demand growth reported over the first six months of 2013 compared to the same period in 2012. It is also ahead of the 5.6% expansion in capacity for June over the previous year. This pushed the passenger load factor to 81.7%.

While the strong growth trend was reflected in all regions it should be noted that Asia-Pacific airlines were responsible for half of the increase in RPKs from May to June. Due to the volatility of Asia-Pacific performance it is too early to say if this acceleration marks a trend for the rest of the year.

European airlines were another highlight of the month. They reported a second consecutive month of solid growth (4.8) reflecting an easing in recessionary conditions in the Eurozone and an improvement in business and consumer confidence. And emerging markets were once again the strongest performers, particularly Africa (10.8%) and the Middle East (11.0%).

"June was a positive month for passenger markets. The stability in the Eurozone, albeit tentative, is giving a boost to business and consumer confidence. And the load factor at 81.7% shows that airlines are efficiently meeting increasing demand for travel. But there are some headwinds. Growth in the BRICS economies, including China, is slowing. And oil prices remain high. The industry is still on track to make $4.00 per passenger this year for a global net profit of $12.7 billion. But there is little margin for error and even a small change in the second half of the year could shift the outlook significantly," said Tony Tyler, IATA's Director General and CEO.

International Markets

International air travel expanded strongly, up by 5.9% in June compared to a year ago. June capacity grew in line with this (5.7%) resulting in a June international load factor of 81.4%.

European carriers recorded 4.7% growth over the previous June. Capacity increased by 3.4% pushing load factors to 83.2%.

Asia Pacific carriers grew by 5.5% on international routes, slightly behind the 6.7% growth in capacity. The load factor stood at 79.0%, the lowest among the major regions. Slower than expected economic growth in China during the first half of 2013 coupled with a decline in both trade and export orders are negatively impacting travel across the region. Nonetheless, Asia Pacific carriers did account for nearly half of the May to June growth in RPKs.

North American airlines grew 3.4% in June year-on-year, ahead of the 3.0% growth in capacity. As a result of continued tight capacity management, the region recorded the highest load factor (87.4%). The June performance was a break from the basically sideways growth of just 1.9% over the first half of the year. It is unlikely that June will mark the start of a step change in the growth trend.

Middle East carriers expanded 12.1% compared to a year ago. This was slightly below the 13.4% capacity expansion resulting in a load factor of 78.4%. The demand for new routes to emerging markets in Africa and Asia has fuelled the growth of the Gulf hubs.

Latin American airlines recorded growth of 8.7% in June, ahead of the 7.7% capacity growth. The region's load factor stood at 79.2%. The June performance was boosted by strong business-related demand, as the region posted the strongest trade growth of any region in the second quarter.

African airlines benefitted from strong domestic economic growth in key markets such as Ghana, Nigeria, Ethiopia and the Democratic Republic of Congo, to post growth of 11.2%. Although African airlines' load factors (70.7%) still lag the global average by around ten percentage points, they have made consistent progress to close the gap this year, and in June, improved their load factor by almost three percentage points compared to June 2012.

Selected Domestic Passenger Markets

Total domestic air travel performed strongly in June, with growth of 6.1% compared to June 2012, and growth in all major markets. Domestic capacity expanded by 5.2% leading to a load factor of 82.0%.

The United States saw domestic growth of 2.4% in June. This weak growth reflects a combination of capacity management, a mature market, and the slowdown in the US economy in Q2. North American carriers posted the highest domestic load factor at 87.1%.

The Chinese domestic market grew 14.6% in June and the load factor stood at 81.5%. This robust performance came despite a reported slowdown in the Chinese economy in recent months. Declining manufacturing employment may put pressure on demand in the months to come.

Brazilian domestic travel was up 3.2% compared to June 2012. This is positive news in a market that is struggling with a 0.6% contraction over the first half of the year and the likelihood of continued economic weakness. Load factors have been a bright spot however, reaching 77.4% in June as airlines tightly control capacity.

The Indian domestic market grew 7.7% in June year-on-year, well ahead of a capacity expansion of 2.6%. Load factors reached 81.5%. Reductions in domestic fares may be leading to increased demand, but it is difficult to discern the true strength of the Indian market due to the volatility of month-to-month traffic.

Russia posted the second-strongest domestic growth rate in June, up 9.8% on a year ago. The outlook for the rest of the year looks positive as the Russian economy looks poised to pick up.

Japan's domestic market showed a solid rise of 6.9%, reflecting strong momentum in the country's economy. A milestone was passed, as Japan's air travel market recovered to pre-tsunami levels. Load factors of 59.5% however, indicate the continuing challenges in the market.

Bottom Line

"The half-year report for passenger markets is broadly positive. There is plenty of evidence to support some cautious optimism. Airlines are expecting continued growth in demand, but there is little immediate hope for an improvement in yields. In the short term, cost control remains high on every airline's agenda. And the longer-term challenge is to expand value streams to generate sustainable levels of profitability," said Tyler.

The July IATA Airline Business Confidence index reported that 61.5% of respondents expect an improvement in demand. But only half (30.8%) expect any improvement in yields over the next 12 months.

IATA

Subscribe to our Travel Industry News RSS Feed Travel Industry News RSS Feed from TravelNewsAsia.com. To do that in Outlook, right-click the RSS Feeds folder, select Add a New RSS Feed, enter the URL of our RSS Feed which is: https://www.travelnewsasia.com/travelnews.xml and click Add. The feed can also be used to add the headlines to your website or channel via a customisable applet. Have questions? Please read our Travel News FAQ. Thank you.

     
Advertising
Advertising
Copyright © 1997-2024 TravelNewsAsia.com