Stats: Air Travel Demand Up 6.1% in May

Growth
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Demand for air travel rose 6.1 percent in May versus the same month last year, according to the latest global passenger traffic results from the International Air Transport Association (IATA). The move represented a slight pickup from 6.0 percent year-over-year growth for April. Capacity climbed 5.9 percent and load factor rose 0.1 percentage point to 80.1 percent.

"May was another solid month in terms of demand growth. As had been expected, we saw some moderation, as rising airline costs are reducing the stimulus from lower airfares. In particular, jet fuel prices are expected to be up nearly 26 percent this year compared to 2017. Nevertheless, the record load factor for the month signifies that demand for air connectivity is strong," said Alexandre de Juniac, IATA’s director general and CEO, in a written statement.

International Passenger Markets

International passenger traffic demand rose 5.8 percent, which was up from 4.6 percent growth in April. All regions recorded growth, led by Asia-Pacific airlines. Total capacity climbed 5.4 percent, with load factor rising 0.3 percentage point to 78.7 percent.

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Asia-Pacific airlines saw their traffic rise 8.0 percent in May compared to the year-ago period, slightly down on an 8.1 percent increase in April. Capacity increased 7.6 percent, and load factor edged up 0.3 percentages point to 77.9 percent. Passenger traffic has continued to trend strongly upwards in seasonally-adjusted terms, buoyed by a combination of robust regional economic growth and increases in the number of route options for travelers.

European carriers’ May demand climbed 6.2 percent over May 2017, well above the 3.4 percent year-over-year growth recorded in April. Capacity rose 5.1 percent and load factor was up 0.8 percentage point to 83.5 percent, which was the highest among regions. Despite the impact of strikes in the region and mixed signals regarding the economic backdrop, traffic growth is healthy.

Middle East carriers’ May demand growth slowed to 0.8 percent compared to a year ago, from 2.9 percent annual growth recorded in April. The earlier timing of Ramadan this year may have affected the result, but more broadly, the upward trend in traffic has slowed compared to last year. May capacity increased 3.7 percent, and load factor fell 1.9 percentage points to 67.5 percent.

North American airlines’ traffic rose 4.9 percent in May compared to May 2017, a strong rebound from 0.9 percent annual growth in April (which was a 36-month low). Capacity climbed 3.4 percent and load factor increased 1.2 percentage points to 82.0 percent. Given the comparatively strong U.S. domestic economy, April’s weak demand performance likely was more reflective of unfavorable year-to-year comparisons with April 2017, when the current upsurge in growth began.

Latin American airlines experienced a 7.5 percent increase in traffic in May compared to the same month last year, which was up from 6.5 percent growth in April. Capacity climbed 7.0 percent and load factor rose 0.4 percentage points to 81.6 percent. Economic disruption in Brazil may be contributing to a slight slowdown in demand growth in recent months, but this is not expected to have a long-term impact on the healthy traffic trend.

African airlines’ traffic rose 3.8 percent in May compared to the year-ago period, which was an eight-month low. Capacity rose 3.2 percent and load factor edged up 0.4 percentage point to 66.4 percent. The region’s two largest economies, Nigeria and South Africa, may be moving in opposite directions again, with higher oil prices bolstering the Nigerian economy, while business confidence in South Africa has weakened again.

Domestic Passenger Markets      

Domestic demand rose 6.6 percent in May compared to May 2017, led by growth in China and India. This was down from the 8.6 percent year-on-year growth recorded in April largely owing to moderate growth in both countries, although each continued to post double-digit traffic gains.    

India’s domestic traffic rose 16.6 percent year-over-year, which was down from 25.7 percent in April. Passenger volumes in India have fallen back in seasonally-adjusted terms in recent months alongside some mixed signals on the economic front. Notwithstanding this, May was India’s 45th consecutive month of double-digit annual RPK growth. Demand continues to be supported by strong growth in the number of airport connections within the country: some 22% more airport-pairs are scheduled to operate in 2018 compared to last year.

U.S. domestic traffic experienced a mild pick-up in May, with 5.5 percent year-over-year traffic growth, up from 5.3 percent in April. This partly offset the moderate growth in China and India. Domestic traffic is trending upward at an annualized rate of around 7 percent, helped by the comparatively strong U.S. economy.

"Last month, IATA released its mid-year economic report showing expectations of an industry net profit of $33.8 billion. This is a solid performance. But our buffer against shocks is just $7.76. That’s the average profit per passenger that airlines will make this year—a narrow 4.1 percent net margin. And there are storm clouds on the horizon, including rising cost inputs, growing protectionist sentiment and the risk of trade wars, as well as geopolitical tensions. Aviation is the business of freedom, liberating people to lead better lives. Governments that recognize this will take steps to ensure aviation is economically sustainable. And aviation works best when borders are open to trade and people," said de Juniac.  

Source: IATA

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