While the impact of U.S. budget cuts has yet to play out and fuel prices are high, the International Air Transport Association (IATA) predicts that despite headwinds—real and potential— that international carriers will see continued and potentially even strengthened growth in 2013.
IATA released global air travel demand statistics for January showing a continuation of the uptick in passenger travel that began at the end of 2012. Overall, demand was up 2.7 percent over the previous January which is slightly ahead of the 2.2 percent expansion in capacity. Load factors stood at 77.1 percent, IATA said.
“Passenger travel is growing in line with business confidence levels. Recent months have seen some positive economic signs emerge in both the U.S. and China, and the Eurozone crisis seems to have stabilized. Of course risks remain," said Tony Tyler, IATA’s director general and CEO.
IATA warned that strong demand for air travel driven by the Chinese New Year has distorted the January figures. Chinese New Year fell in January 2012 and in February this year. The comparisons to such a strong month made January 2013 demand look weaker than the underlying trend would indicate.
After adjusting for such seasonal factors, IATA estimates that the actual growth would have been 3.5 percent. This growth is still lower than the 5.3 percent 2012 average. However, air travel growth slowed sharply through the year and the results of the past few months represent an acceleration of demand growth, IATA said.
International markets outperformed the global industry average in January with a 3.7 percent increase in demand against a 2.7 percent capacity expansion. This led to load factors of 77.6 percent, IATA said.
North American carriers reported a 1.5 percent expansion in demand even as capacity was trimmed by 0.8 percent when compared to last year. Demand is strong on the back of improved economic performance in the US, IATA notes, an airlines are tightly managing capacity. The region’s airlines posted the highest load factor at 79.4 percent.
Domestic air travel expanded by 1.1 percent, slightly behind a capacity expansion of 1.4 percent, IATA said, estimating that domestic market demand expanded by about 5 percent compared to the year-ago period.Domestic demand for air travel in the US was up 3.2 percent on year-ago levels, ahead of a 2.4 percent capacity expansion. Load factors were the highest at 78.8 percent. The extent to which US budget cuts could impact the domestic aviation market remains to be seen, IATA said..
IATA's analysis noted that global attention is focused on the US to understand the economic impact of mandated budget cuts. " For millions of travelers and the aviation industry, the concerns go deeper. There are threats of reduced availability of government-provided services for airport security, border control and air traffic management," IATA said..
"That the connectivity of the world’s largest economy is being held captive to politics is not acceptable. Airlines pay for air traffic management services through fees and taxes that average 20% of the cost of a typical domestic air ticket. Clearly there are some difficult budget decisions for the US government to make. But compromising connectivity—which supports 9.3 million jobs and $669.5 billion in economic activity in the US—is not the right choice,” said Tyler.
Visit www.IATA.org