IATA Reports Robust Air Passenger Growth

International passenger demand in June showed robust growth - 6.0 percent  measured in revenue passenger kilometers (RPK) - the International Air Transport Association (IATA) reports.  The figure is  also well ahead of the 4.8 percent  for the first six months of 2012. It is also ahead of the 5.6 percent expansion in capacity for June over the previous year. This pushed the passenger load factor to 81.7 percent, IATA says.

While the strong growth trend was reflected in all regions it should be noted that Asia-Pacific airlines were responsible for half of the increase in RPKs from May to June. Due to the volatility of Asia-Pacific performance it is too early to say if this acceleration marks a trend for the rest of the year, IATA said. 

European airlines were another highlight of the month. They reported a second consecutive month of solid growth (4.8%) reflecting an easing in recessionary conditions in the Eurozone and an improvement in business and consumer confidence. And emerging markets were once again the strongest performers, particularly Africa (10.8%) and the Middle East (11.0%), according to IATA.

“June was a positive month for passenger markets. The stability in the Eurozone, albeit tentative, is giving a boost to business and consumer confidence. And the load factor at 81.7 percent shows that airlines are efficiently meeting increasing demand for travel.  But there are some headwinds. Growth in the BRICS economies, including China, is slowing. And oil prices remain high. The industry is still on track to make $4.00 per passenger this year for a global net profit of $12.7 billion. But there is little margin for error and even a small change in the second half of the year could shift the outlook significantly,” said Tony Tyler, IATA’s Director General and CEO.

International air travel expanded strongly, up by 5.9 percent in June compared to a year ago. June capacity grew in line with this (5.7%) resulting in a June international load factor of 81.4 percent..

European carriers recorded 4.7 percent growth over the previous June. Capacity increased by 3.4 percent pushing load factors to 83.2 percent., IATA reports.

Asia-Pacific carriers grew by 5.5 percent on international routes, slightly behind the 6.7 percent growth in capacity. The load factor stood at 79.0 percent, the lowest among the major regions. Slower than expected economic growth in China during the first half of 2013 coupled with a decline in both trade and export orders are negatively impacting travel across the region. Nonetheless, Asia Pacific carriers did account for nearly half of the May to June growth in RPK, IATA reports.

North American airlines grew 3.4 percent in June year-on-year, ahead of the 3.0 percent growth in capacity. As a result of continued tight capacity management, the region recorded the highest load factor (87.4%). The June performance was a break from the basically sideways growth of just 1.9 percent over the first half of the year. It is unlikely that June will mark the start of a step change in the growth trend, IATA said

Total domestic air travel performed strongly in June, with growth of 6.1 percent compared to June 2012, and growth in all major markets, IATA said. Domestic capacity expanded by 5.2 percent leading to a load factor of 82.0 percent.

The United States saw domestic growth of 2.4 percent in June. This weak growth reflects a combination of capacity management, a mature market, and the slowdown in the US economy in Q2, IATA said. North American carriers posted the highest domestic load factor at 87.1 percent.

“The half-year report for passenger markets is broadly positive. There is plenty of evidence to support some cautious optimism. Airlines are expecting continued growth in demand, but there is little immediate hope for an improvement in yields. In the short term, cost control remains high on every airline’s agenda. And the longer-term challenge is to expand value streams to generate sustainable levels of profitability,” said Tyler.

The July IATA Airline Business Confidence index reported that 61.5 percent of respondents expect an improvement in demand. But only half (30.8%) expect any improvement in yields, IATA says.

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