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IATA Reports Strong Passenger Growth in September 2014

Home Search Send to Friend Latest Travel News Asia Wednesday, 5 November 2014
 

IATAs global passenger traffic results for September 2014 show demand growth of 5.3% (measured in revenue passenger kilometers or RPKs) over September 2013.

This continues the positive growth trend for passenger demand even though the performance was slightly below the August year-on-year rise of 6.3%. September capacity rose 5.1% and load factor rose 0.2 percentage points to 80.3%.

Overall, demand for passenger travel is growing in line with expectations. We saw, however, some shifting of the sources of that growth in September, largely driven by economic factors. The strengthening of the US and Asian economies was offset by weakness in Europe and Latin America, said Tony Tyler, IATAs Director General and CEO. The three big stories in September were Europe, Russia and India.

- European airlines reported 3.9% growth for international demand. Thats a significant drop from the 7.0% reported in August indicating the impact of the Air France crew strike and a general weakening of European economic prospects.

- Year-on-year growth for Russian domestic demand fell to 5.6% in September from 10.1% in August. The impact of price stimulus wore-off and the weakness revealed could be a first indicator of the economic impact of the Russia-Ukraine crisis.

- Indian domestic travel spiked with a 26.3% growth in September (several times the 7.6% growth recorded in August) as a result of price stimulation.

International Passenger Markets

September international passenger demand rose by 5.3% compared to the same month in 2013. This was exceeded by a capacity expansion of 5.7% which resulted in a softening of the load factor to 80.5%, down 0.2 percentage points from the year-ago period.

 Asia Pacific airlines reported September demand growth of 4.8% compared to a year-ago. Although this is a weaker rise than August, the recent trend has been positive and reflects better demand conditions in the region, including stronger trade activity that encourages business travel. Capacity climbed 7.2% and load factor dropped 1.7 percentage points to 76.2%.

 European carriers recorded growth of 3.9% in September compared to a year ago, a significant slowdown on the August rise of 7.0%. Along with the impact of the 14-day Air France crew strike, this also reflects a lapse in the Eurozone economic recovery. Indicators show a weakening in key economies including Germany, owing to the Russia-Ukraine crisis and related sanctions, as well as a reversal in prior improvements in consumer confidence. With capacity up just 2.6%, load factor was 84.7%, the highest for any region and a 1 percentage point rise compared to last year.

 North American airlines saw international demand rise by just 2.1%. However, underlying trends in business activity are positive and growth in trade volumes has accelerated, boding well for business-related international travel. Capacity rose 3.8% and load factor slipped 1.4 percentage points to 82.4%.

 Middle East carriers once again recorded the strongest increase in international air travel, with a rise of 15.8% in September compared to a year ago. Airlines here continue to benefit from the strength of regional economies as well as expansion in export orders that support international business activity and business-related premium travel. Capacity rose 14.9% and load factor climbed 0.6 percentage points to 78%.

 Latin American airlines posted growth of 4.6% in September year-on-year, which was a notable slowdown on August (8.3%). Growth in the Brazilian economy remains fundamentally weak and recent indicators of growth and business activity are showing signs of further weakness, but regional trade volumes have been improving. With capacity up 4.9% compared to a year ago, load factor slipped 0.2 percentage points to 79.9%.

 African airlines experienced a 1.8% rise in international RPKs in September compared to a year ago, down significantly from August year-over-year growth of 7%. The deceleration in growth rates cannot be immediately interpreted as a trend change as significant volatility in volumes exists for this region. The effect of any Ebola-related traffic downturn is mostly restricted to Guinea, Liberia and Sierra Leone, but these markets comprise a very small proportion of overall African traffic. Adverse economic developments in some parts of the continent are responsible for the weakness in international air travel for regional carriers. However, South Africa has managed to avoid entering a recession, which could help moderate downward pressure on air travel. Capacity rose 2.6% and load factor fell 0.6 percentage points to 70.5%, the lowest among all regions.

Domestic Passenger Markets

Demand on domestic routes rose by 5.3% in September over the year-ago period, while capacity climbed 4.0%, pushing load factor up 1 percentage point to 80%. The strongest growth was recorded in India (26.3%) and China (8.6%).

 Indian domestic traffic spiked 26.3% in September compared to a year ago. Whereas previous improvements in growth rates potentially were attributable to revived confidence over the new business-supportive government, the strong increase in September was owing to market stimulation measures introduced by carriers.

 Domestic RPKs in Russia rose 5.6% in September, a considerable deceleration compared to the August increase of 10.1% (which was largely supported by price stimulus). This may be the first sign of an economic slowdown owing to the Russia-Ukraine crisis and ensuing EU sanctions.

Bottom Line

Its an interesting time for the global air transport industry, highlighting the complex vulnerabilities of the business. The fall in the price of oil is a good example. It is good news for an industry that spends a third of its operating budget on fuel. The full impact of the price drop will only be realized over time because of a time lag built into jet fuel pricing. And it could even be an indicator of difficulties ahead if the fall is driven by declining demand for oil rather than rising supply capacity, said Tyler. There are a lot of risks out theregrowing weakness in key economies such as Europe and Brazil, the potential threat of Ebola to public confidence in flying, and the impact of political instability in various parts of the world. The positive economic developments in Asia and the US continue to underpin profitability. But it is a delicate balancing act.

IATA anticipates that airlines will deliver an $18.0 billion net profit on revenues of $746 billion for a 2.4% net profit margin in 2014.

See other recent news regarding: Interviews, Pictures, Videos, IATA, Traffic, September 2014

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