Global passenger traffic shows continued strength: IATA

Monday, 13 May 2013 00:00 -     - {{hitsCtrl.values.hits}}

The International Air Transport Association (IATA) has announced global passenger traffic results for March, showing strong demand growth led by emerging markets with all regions showing gains. Total traffic rose 5.9% compared to March 2012.

Part of the rise may be attributable to traffic related to the Easter holiday, which occurred in March this year versus April 2012. But the seasonally adjusted trend continues to show strong growth, with demand expanding at an 8% annualised rate in the six months since October 2012. Capacity rose 3.5% compared to the year-ago period, pushing up load factor 1.8% points to 80.3%.

“Strong demand for air travel is consistent with improving business conditions. Performance, however, has been uneven. Mature markets are seeing relatively little growth while emerging markets continue to show a robust expansion. Although oil prices have softened in recent weeks, they remain high against historical averages. In view of this, airlines are responding with a very cautious approach to capacity management,” IATA Director General and CEO Tony Tyler said.

March international passenger demand rose 6.0% compared to the year-ago period, with capacity up 3.5%, pushing up load factor 1.8% points to 79.9%. Compared to February, traffic rose 0.4%. The strongest growth occurred in the emerging markets of Latin America and the Middle East.

Asia-Pacific carriers’ traffic rose 5.4% in March compared to the same month last year. Strong growth in the Chinese market, as well as an improvement in the Asia trade since the 2012 fourth quarter, supported increased demand. Half of the growth in international traffic since October has been carried by Asia-Pacific carriers. Capacity rose 3.4% year to year and load factor climbed 1.5% points to 79.0%. Compared to February, traffic rose 0.8%.

European carriers recorded 3.7% growth on international services compared to March 2012. However, the trend for international travel on European airlines has been largely flat since October 2012, reflecting persisting weakness in the Euro zone economy and recent downward revisions to growth expectations for 2013. Nearly flat capacity growth of 0.4% helped propel load factor 2.6% points to 81.2%, second highest among regions.

North American airlines’ international traffic rose 2.4% year-on-year in March (after rising just 0.3% in February). This was the slowest rise among the regions, in part owing to a 0.9% reduction in capacity. Load factor rose 2.6% points to 83%, the highest for any region. Although the underlying growth trend has been improving for several months, recent months have seen considerable volatility in the data and some indication of weakness. The ongoing cuts in US federal spending (sequestration) could eventually impact economic growth and ultimately consumer spending.

Middle East carriers experienced the strongest traffic growth for any region at 15.6% year-over-year, with a 14.2% rise in capacity that boosted load factor 1% point to 79.7%. While a smaller share of international air travel (13.4%) they have carried about 20% of the increase in demand over the past six months.

Latin American airlines also experienced very strong growth, with March demand up 11.8%, second highest among all regions, reflecting the better performance of the region’s economies. Capacity, however, climbed 13.3% year-over-year and load factor declined one percentage point to 76.9%. The region was the only one to experience a decline in load factor.

African airlines’ traffic climbed 8.2% in March, while capacity rose 5.7%, pushing load factor up to 67.8%, still the lowest for any region. Although traffic declined 1.1% compared to February, the region is seeing solid growth.



 Domestic passenger markets

Domestic markets also experienced strong growth, with traffic up 5.7% in March versus a year ago. However, this masked wide variations among countries, with growth largely driven by China. Capacity rose 3.5% and load factor was 80.9%, up 1.7 % points.

China’s domestic market surged 16.6% in March, the highest for any region and reflecting the strong economy. Capacity climbed 12.4% and load factor was 83.6%, second highest among the regions. Traffic rose 1.1% compared to February.

US traffic climbed 3.1% while capacity rose 2.6%, pushing load factor up 0.4% point to 84.7%, the highest among all domestic markets. The growth trend for the US domestic markets had been showing strong acceleration over the past several months in line with an improving economic outlook and consumer confidence, but in March there was little further progress in that trend with almost no change (0.1%) compared to February.

Brazil traffic slipped 1.4% in March as airlines have reduced capacity in response to downward pressure on profitability owing to slower than expected economic growth. Capacity plunged 8.9% and load factor jumped 5.3% points to 70.5%.

Japan’s domestic market declined 1.1% year-over-year; however, business confidence and export orders increased in March, suggesting a more positive outlook could be ahead. In the meantime, the market is 11% below pre-tsunami levels. Capacity declined 2.6% and load factor climbed one percentage point to 65.8%, the lowest for any market.

Indian domestic traffic spiked 7% compared to a year ago, the second strongest performance. A reduction in fares by several airlines serving the Indian domestic market is the likely cause of the demand boost. Capacity rose 1.9% and load factor rose 3.6 percentage points to 76.0%.

Australian domestic traffic rose 2.7% on a 3.9% rise in capacity compared to March 2012. Load factor declined 0.8% point to 76%.Although the growth trend for domestic demand is showing some signs of slowing, the outlook for the economy remains optimistic.



 The bottom line

“Business confidence levels continue to foreshadow an economic upturn. It is important that governments avoid placing roadblocks to recovery. The flight delays and cancellations inflicted on air travellers to, from and within the US owing to sequestration-related budget cuts had the potential to inflict real damage to the economy if they had been permitted to continue,” Tyler said.

“Fortunately, Congress and the Obama Administration put aside partisan political disputes for the good of the economy. But aviation is far too important to be treated as a bargaining chip in political disputes in the first instance. Let’s hope that lesson is well learned.

“The next challenge is to knock back the US$ 5.5 billion in added taxes and charges in the Administration’s budget proposal, which represent a 29% increase over the US$ 19 billion in fees and taxes that airlines and air travellers paid last year. Under such conditions, the natural ability of aviation connectivity to catalyse economic growth and jobs is compromised,” Tyler said.

 

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