Stats: Air Travel Demand Up 7.8 Percent in June

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The International Air Transport Association (IATA) has announced global passenger traffic data for June showing that demand (measured in total revenue passenger kilometers or RPKs) rose by 7.8 percent compared to the year-ago period. This was in line with the 7.7 percent growth recorded in May. All regions reported growth. June capacity (available seat kilometers or ASKs) increased by 6.5 percent, and load factor rose 1.0 percentage point to 81.9 percent.

For the first six months of 2017, the industry experienced a 12-year high in traffic growth (7.9%) and a record first half load factor of 80.7 percent.

"A brighter economic picture and lower airfares are keeping demand for travel strong. But as costs rise, this stimulus of lower fares is likely to fade. And uncertainties such as Brexit need to be watched carefully. Nonetheless, we still expect 2017 to see above-trend growth," said Alexandre de Juniac, IATAs director general and CEO, in a written release.


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International Passenger Markets

June international passenger demand rose 7.5 percent compared to June 2016. All regions recorded growth, led by airlines in Africa. Capacity climbed 6.2 percent, and load factor climbed 1.0 percentage point to 80.6 percent.

Asia-Pacific airlines June traffic jumped 9.1 percent compared to the year-ago period. Capacity rose 7.9 percent and load factor edged up 0.9 percentage points to 79.3 percent. The overall upward trend in seasonally-adjusted traffic remains strong, although volumes have slipped in recent months. Traffic on Asia-Europe routes continues to trend upwards following terrorism related disruptions in early 2016. However, solid demand growth on international routes within Asia has paused.

European carriers saw traffic rise 8.8 percent in June compared to June 2016, which was up from a 7.5 percent year-over-year increase recorded in May. Capacity climbed 6.5 percent and load factor rose 1.8 percent percentage points to 85.9 percent, highest among the regions. The stronger growth reflects both a favorable comparison with the year-ago period, as well as increased momentum in the regional economic backdrop.

Middle Eastern carriers posted a 2.5 percent traffic increase in June, which was a slowdown from the already subdued 3.7 percent growth seen in May. Capacity rose 3.1 percent, and load factor slipped down 0.4 percentage points to 68.9 percent. While most markets have seen demand slowing, it is most visible on the Middle East-North America market, which has been affected by a combination of factors including the (recently-lifted) ban on personal electronic devices, as well as a wider negative stimulation from the travel ban that has now been implemented for certain countries. However, passenger traffic between the Middle East and North America was already slowing in early 2017, in line with a moderation in the pace of growth of the largest carriers in the region.

North American airlines demand rose 4.4 percent compared to June a year ago. Capacity climbed 4.1 percent, with load factor inching up 0.3 percentage points to 84.5 percent.

The comparatively robust economic backdrop in North America is expected to continue to support outbound passenger demand. However, anecdotal evidence suggests that inbound tourism is being deterred by the additional security measures in place for travel to the U.S.

Latin American airlines experienced a 9.7 percent rise in demand compared to the same month last year supported by strong travel within the region, while travel to North America is flat to down slightly. Capacity increased by 9.1 percent and load factor rose 0.4 percentage points to 82.1 percent.

African airlines traffic soared 9.9 percent in June. Capacity rose 7.1 percent, and load factor jumped 1.7 percentage points to 64.3 percent, although this still was the lowest among regions. Conditions in the regions two largest economies have continued to diverge, with business confidence in Nigeria rising sharply in recent months, while South Africas economy fell into recession in the first quarter.

Domestic Passenger Markets      

Demand for domestic travel climbed 8.2 percent in June compared to June 2016, up slightly from the 7.9 percent growth seen in May. June capacity increased 7.0 percent, and load factor rose 0.9 percentage points to 84.3 percent. Led by China and India, all markets reported demand increases, but with wide variation.

India led all markets with a 20.3 percent rise in domestic traffic in June. However, the very strong upward trend in traffic has slowed since the countrys unexpected demonetization in November 2016. Indias streak of year-on-year double-digit traffic growth may have ended with June.

Chinas domestic traffic surged 17.6 percent in June, which was ahead of the first half growth rate of 15.2 percent. There continues to be little sign of any slowdown in the traffic trend and second quarter GDP figures were stronger than expected. Air travel demand is continuing to be stimulated by supply factors, including ongoing growth in the number of unique airport-pair routes served, which ultimately translates into time savings for passengers.

The Bottom Line : Air travel recorded its fastest first-half growth in 12 years, pushing load factors to record highs. And the peak northern summer travel season is likely to be record-breaking.

"This is all good news. The demand for travel is strong and that, in turn, will make a positive contribution to the global economy. This growth will also further expose infrastructure deficiencies. In every part of the world airport and air navigation infrastructure is struggling to cope with demand. There are plenty of examples linking connectivity and economic prosperity. But few governments have been able to deliver on the imperatives of sufficient capacity, quality aligned with user needs and affordability. This years strong growth is a reminder that there is no time to lose," said de Juniac.

Source: IATA

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