IATA: Strong air traffic demand growth continues in June 2017

iata-logoAir travel recorded its fastest first-half growth in 12 years, pushing load factors to record highs, reported the International Air Transport Association (IATA) in its latest traffic report. The group expects the strong results to continue, with the peak northern summer travel season likely to be record-breaking.

Global passenger traffic demand for June (measured in total revenue passenger kilometers or RPKs) rose by 7.8% compared to the year-ago period, reports IATA. This was in line with the 7.7% growth recorded in May.

All regions reported growth. June capacity (available seat kilometers or ASKs) increased by 6.5%, and load factor rose 1.0 percentage point to 81.9%.

For the first six months of 2017, traffic grew by 7.9%, a 12-year high, with a record first half load factor of 80.7%.

 

International Passenger Markets

International passenger demand rose 7.5% in June compared to June 2016, with all regions recording growth.

Asia-Pacific airlines’ traffic jumped 9.1% in June compared to the year-ago period. The overall upward trend in seasonally-adjusted traffic remains strong, although volumes have slipped in recent months. Traffic on Asia-Europe routes continues to trend upwards following terrorism related disruptions in early 2016. However, solid demand growth on international routes within Asia has paused.

 

European carriers saw traffic rise 8.8% in June compared to June 2016, which was up from a 7.5% year-over-year increase recorded in May. Capacity climbed 6.5% and load factor rose 1.8% percentage points to 85.9%, highest among the regions. The stronger growth reflects both a favorable comparison with the year-ago period, as well as increased momentum in the regional economic backdrop.

North American airlines’ demand rose 4.4% compared to June a year ago. IATA says that the comparatively robust economic backdrop in North America is expected to continue to support outbound passenger demand. However, it says, anecdotal evidence suggests that inbound tourism is being deterred by the additional security measures in place for travel to the US.

 

Latin American airlines experienced a 9.7% rise in demand compared to the same month last year supported by strong travel within the region, while travel to North America is flat to down slightly.

 

 

Middle Eastern pax traffic remains under pressure, with carriers posting a 2.5% traffic increase in June, which was a slowdown from the already subdued 3.7% growth seen in May. Capacity rose 3.1%, and load factor slipped down 0.4 percentage points to 68.9%. While most markets have seen demand slowing, it is most visible on the Middle East-North America market, which has been affected by a combination of factors including the (recently-lifted) ban on personal electronic devices, as well as a wider negative stimulation from the travel ban that has now been implemented for certain countries. However, passenger traffic between the Middle East and North America was already slowing in early 2017, in line with a moderation in the pace of growth of the largest carriers in the region.

 

African airlines’ traffic soared 9.9% in June. Capacity rose 7.1%, and load factor jumped 1.7 percentage points to 64.3%, although this still was the lowest among regions. Conditions in the region’s two largest economies have continued to diverge, with business confidence in Nigeria rising sharply in recent months, while South Africa’s economy fell into recession in the first quarter.

Domestic Passenger Markets 

Demand for domestic travel climbed 8.2% in June compared to June 2016, up slightly from the 7.9% growth seen in May. Led by China (+17.6% ) and India (+20.3%), all markets reported demand increases, but with wide variation.

 

Moderate growth trend in US traffic and capacity

The US domestic market – the world’s largest – grew by 3.4% year-on-year in H1 2017. This was slower than that registered in H1 2016, but the bigger picture s that the modest upward trend in seasonally adjusted volumes remains in place and consumer confidence surveys remain strong. The domestic US load factor remains the highest of all the markets we track, but following a strong month-on-month pick-up in capacity in June, it was the only market not to post an all-time high for the month.

 

Domestic Brazil struggling for momentum.

Domestic Brazil RPKs grew by a modest 1.0% in H1 2017 from the same period in 2016. Given the fragile political and economic backdrop, volumes are struggling for any momentum in SA terms; passenger volumes are still 8% lower than their peak reached in late 2010. However, airlines in the country have managed to limit the impact on passenger loads; at 79.9% in June, the load factor set a record-high for the month.

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