IATA Reports Slow Passenger Growth Trend

Global traffic results for June show a continued slowing of growth in the demand for air transport,  the International Air Transport Association (IATA) reports. This is in line with weakness in business and consumer confidence, IATA said.

“The uncertainty that we see in the global economic situation is being reflected in air transport’s performance. Although there are some pockets of solid performance, it is difficult to detect a strong trend—positive or negative—at the global level. Passenger markets have been growing more slowly since the beginning of the year and freight markets gains have been mostly very weak. The net effect is a demand limbo as consumers and businesses hedge their spending while awaiting clarity on the European economic front,” said Tony Tyler, IATA’s director general and CEO.

Year-on-year, demand for air travel in June expanded by 6.2 percent, IATA says. Capacity grew by a much more cautious 4.5 percent leaving load factors at 81 percent. While this appears to be a healthy growth rate, the growth trend since early 2012 has seen a slowdown. This is illustrated by isolating the February through June trend which shows 2 percent annualized growth. That is a major slowdown from the 8 percent annualized growth rate experienced from mid-2011 through to January 2012, IATA says.

June demand in international passenger markets was up 7.4 percent on the previous year, IATA says. The growth trend, however, shows little promise. While passenger markets experienced strong growth through to the end of 2011, this has slowed continuously in 2012. For example, from May to June 2012 demand was up just 0.2 percent. When looked at over the second quarter of 2012, the trend in international air travel has been an annualized growth rate of just over 2 percent.

North American airlines saw 1.6 percent growth in demand while capacity was cut by 0.3 percent compared to the previous June, IATA says. This pushed the load factor to 86.9  percent which was the highest among the regions. Compared to May there was basically no growth with the region’s airlines reporting a 0.1 percent decline in demand.

All markets, except India, showed an expansion in demand in June compared to the previous year. Similar to the developments in international travel, however, economic slowdowns in various countries are keeping the growth trend soft throughout 2012.

The first six months of 2012 have seen overall domestic air travel growth trend slow to a 2 percent annualized rate, after increasing at more than 6 percent annualized growth over the second half of 2011. Overall, domestic demand grew by 4.1 percent, slightly ahead of capacity which grew by 3.6 percent. The domestic load factor stood at 81.1 percent.

U.S. domestic demand was up 0.8 percent compared to the previous June, IATA said. With capacity growth held to 0.1 percent, US carriers reported a load factor of 86.6 percent--the highest among the major domestic markets.

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