On the whole, the aviation industry should be looking back on 2015 as a year of growth and reasonable returns, albeit there are four months left of the year and there are considerable differences between markets across the globe.
For the second quarter of 2015, IATA is showing the following passenger demand (Revenue Passenger Kilometres, RPKs) figures: April 5.9%, May 6.9% and June 5.7%. The first quarter figures were: January 4.6%, February 6.4% and March 7.4% and 2014 ended 5.9% up on 2013. There are no surprises that Asia and the Middle East experienced the largest growth figures with 6.8% and 10.5% respectively. Despite the concerns over the Chinese economy, the rising middle class in China is driving the growth in outbound Chinese tourism, a market that is now 107 million and grew 19.5% in 2014 over 2013. The Chinese outbound market has consistently grown at 20% per year over the last few years and shows no signs of slowing. So expect more new routes like the Xiamen Airlines serving Amsterdam and Hainan Airlines serving Copenhagen.
The North American and European markets have achieved more moderate growth rates of 2.7% and 4% respectively, but given the maturity of these markets, it is still an impressive recovery. It may have taken decades, but finally consolidation in the American market appears to have delivered profits; all three American carriers posted record profits for the second quarter, an incredible turnaround. The low price of oil, now at $46 per barrel, has certainly contributed to the unusually healthy returns by the US carriers. The European carriers have benefitted from the strong demand and the lower oil prices. IAG has had a good first half-year of 2015, which has enabled the airline group to acquire Aer Lingus, which will provide some relief to the Heathrow hub and give the group a growing transatlantic hub. The major low cost carriers of easyJet, Ryanair and Norwegian have all had strong results in 2015, and are all promising significant capacity increases next year, with additional aircraft coming into their fleets. The full service carriers’ reaction to the now dominant LCCs has been to develop their own LCC brands and we can expect more growth from these carriers. We will wait to see if Air Frances-KLM’s Transavia fulfils its ambition to develop bases outside its home territories of France and the Netherlands.
The surprising regions in terms of performance are Latin America and Africa, where traffic has increased in Latin America by 5.9%, whilst Africa passenger traffic has fallen 2%. The strong demand in Latin America is surprising, given the struggling economies of Brazil and Argentina. Increasing connectivity between North America and Latin America is driving the growth as well as increasing inter-regional traffic.
The drop in passenger demand in the Africa region is surprising, given the increase in services by the Middle East carriers and Turkish Airlines which has started a number of new services to the African continent. The drop in passenger traffic is a reflection of the impact of low oil prices on the oil producing countries like Nigeria, the challenged African economies like South Africa and the impact of the lack of political stability in North Africa. Bringing the event to Africa for the first time may encourage some of the African governments to accelerate liberalisation and take a new approach to their aviation policies.
So the outlook for the rest of the year looks promising for many regions around the globe, which should provide a great backdrop to World Routes 2015.
ASM will deliver a briefing, The Art of Route Forecasting at World Routes on Sunday 20 September at 15:00.