IATA Reports Strong Passenger Demand

Total passenger demand rose 6.1 percent in April, the International Air Transport Association (IATA) reports. Despite continuing economic weakness in some parts of the world, demand for air travel continues to grow, IATA said. The 6.1 percent overall growth recorded for April is above the 20-year trend.

Strong demand for air travel with limited capacity expansion pushed load factors to 79.3 percent which is a record high for an April load factor.

“It’s a volatile and risky world. Airlines are being cautious managing through the uncertainty. Overall passenger demand was up 6.1 percent in April and capacity increases were held back to 3.8 percent. There are signs that cargo has bottomed out. Amid the many distortions that have marked the first four months of the year, it is possible to identify the start of a growth trend in cargo for some parts of the world. But economic uncertainty in Europe makes it very difficult to be optimistic in the near to medium-term,” said Tony Tyler, IATA’s director general and CEO.

International air travel rose 7.4 percent in April compared to the year-ago period, outstripping a capacity expansion of 4.3 percent. April load factors stood at 79.1 percent, up 2.3 percentage points from April 2011.

North American airlines saw passenger demand expand by 1.6 percent in April compared to the previous year. This is the weakest demand growth among all regions and represents a weakening from the 5.3 percent year-on-year growth recorded in March, IATA says.

However, the trend in North American travel is still positive since the end of 2011, as US economic conditions and particularly consumer confidence has improved. North American carriers were also the only region to cut capacity (by an almost equal 1.5 percent). This allowed the region’s carriers to post the strongest load factors at 80.8 percent, IATA said.

Domestic markets grew at about half the rate of international markets, just 3.9 percent. Load factors of 79.7 percent were slightly higher than on international routes (79.1 percent). US domestic markets grew by 1.0 percent in April while capacity contracted by 0.7 percent. Load factors were the highest at 83.6 percent.

“The growth in passenger markets is encouraging. But it comes against an environment of continuing high oil prices and growing economic uncertainty. So translating the stronger demand into profits will be difficult,” said Tyler.

With the exception of Africa, all markets saw capacity expansion at levels below the expansion in demand. “In the face of economic uncertainty, many airline managements will be going back to first principles—careful capacity management, cost control and conserving cash. This will be the order of the day until some clarity comes to the global economic outlook. Of course the uncertainty impacts the whole value chain. We are all in this together. Airlines will be particularly looking to their industry partners to share the imperative on cost control,” said Tyler.

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