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Airline Traffic Growth Slows Again in July

August 30, 2012

Global traffic results for July show are showing slower growth in both air travel and freight, but with considerable variation by region and market, the International Air Transport Association (IATA) reports.

July passenger demand in aggregate was 3.4 percent higher than the same month last year, compared to a 6.3 percent increase in June and average growth of 6.5 percent over the first half of the year. This slowdown in travel growth is being driven largely by the recent fall in business confidence in many economies, IATA says.

Airlines have responded to this slower growth environment by reducing the capacity added to markets, a move which has stabilized load factors at relatively high levels and provided some support for profitability in the face of high fuel prices, IATA says. In July passenger capacity rose 3.6 percent, in line with the expansion of traffic, keeping the load factor at a relatively high 83.1 percent.

“The uncertain economic outlook is having a negative impact on demand for air transport,” said Tony Tyler, IATA’s Director General and CEO. “The cargo business is 3.2 percent smaller than it was a year ago. And passenger markets—with the exception of Africa, China-domestic and the Middle East—saw demand fall from June to July. Overall passenger demand is still up 3.4 percent on the previous July. But the growth trend is clearly slowing. This, along with rising fuel prices is likely to make it a tough second half of the year.”

International Passenger Markets: July international passenger demand was up 3.5 percent compared to the year-ago period, exactly in line with a 3.5 percent expansion in capacity. Load factors stood at 83.3 percent. The slowdown becomes evident when comparing to the previous month (June) when the year-on-year rate was 7.5 percent, IATA noted. Growth on average during the first half of the year was also 7.5 percent.

"The slowdown in international air travel growth has been concentrated in the past few months, in line with the decline of business confidence. Weakness in some key domestic air travel markets has been evident for rather longer period. Only African and Middle Eastern carriers showed month-to-month growth. Carriers in all other regions reported aggregate declines for international demand for July compared to June," IATA said.

North American airlines’ international traffic fell 2.1 percent year-on-year in July (after rising 1.6 percent in June) in part owing to decisions to trim capacity, particularly on the North Atlantic market. Compared to June (the previous month), demand contracted by 1.3 percent. The load factor was 86.7 percent, the highest among all regions.

Domestic Passenger Markets: Domestic markets also experienced slow growth, continuing the trend that began early this year, IATA reports. While China and Brazil recorded strong growth that was offset by weakness in India and Japan, US traffic slipped 0.4 percent in July while capacity rose by 0.2 percent. Load factors dipped to 86.8 percent from 87.4 percent last year, still the highest among all the domestic markets.

“The huge success of the London Olympics was also an important reminder of the vital role that international aviation plays in bringing the world together and facilitating global mega-events. Now all eyes are on Brazil which will host the 2014 World Cup and the 2016 Olympics. And aviation will play a key role there as well,” said Tyler.



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