Global passenger demand slowdown only temporary, says IATA

Year-on-year global passenger traffic rose 4.6 percent in January, figures released by the International Air Transport Association (IATA) have revealed, but the growth was the slowest increase in nearly four years.

Global passenger traffic results for January 2018 have revealed traffic (revenue passenger kilometers or RPKs) rose 4.6 percent compared with the same month in 2017, according to statistics released by IATA.

This was the slowest year-over-year increase in nearly four years, but the organisation said the results were affected by temporary factors including the later timing of the Lunar New Year in 2018 as well as less favorable comparisons with the strong upward trend in traffic seen in late 2016-early 2017.

IATA estimates the impact of the later Lunar New Year-related travel period holiday represented around two-fifths of the slowdown in year-over-year growth for the month. January capacity (available seat kilometers or ASKs) rose 5.3 percent, and load factor slipped half a percentage point to 79.6 percent.

"Despite the slower start, economic momentum is supporting rising passenger demand in 2018," said Alexandre de Juniac, IATA's director general and chief executive.

"That said, concerns over a possible trade war involving the US could have a serious dampening effect on global market confidence, spilling over into demand for air travel."

International demand

International passenger demand growth slowed to 4.4 percent in January, from 6.1 percent in December, with all regions recording growth, led by Latin America and Europe. Capacity rose 5.3 percent and load factor dipped 0.7 percentage point to 79.6 percent.

  • Asia-Pacific carriers recorded a demand increase of 4.6 percent compared to January 2017, which was a 46-month low. IATA said this largely was owing to the impact of the later Lunar New Year, which fell in mid-February this year. Capacity rose 6.1 percent, and load factor dropped 1.2 percentage points to 80.4 percent.
  • European carriers' international traffic climbed 6 percent in January compared to the year-ago period, up from 5.8 percent growth in December 2017. The region was the only one to see an acceleration in traffic compared to the prior month. Capacity rose 5 percent and load factor was up 0.7 percentage point to 80.8 percent.
  • Middle East carriers had the weakest growth, with demand up just 0.5 percent compared to January 2017, the slowest pace since September 2008. The market to/from North America has been especially hard hit owing to factors including the temporary ban on large portable electronic devices as well as the proposed travel bans to the US from some countries in the region. Capacity climbed 4.6 percent and load factor fell 3.1 percentage points to 76.8 percent.
  • North American airlines experienced a 3.5 percent rise in traffic over a year ago, but capacity rose 4.3 percent and load factor dipped 0.7 percentage point compared to a year ago to 79.6 percent
  • Latin American airlines' traffic climbed 7.3 percent in January compared to January 2017, strongest among the regions. Capacity rose 8.2 percent, however, and load factor slipped 0.7 percentage point to 82.6 percent, which still was the highest among the regions. Stronger economic conditions in Europe are helping support rising demand on the market between Europe and South America in particular.
  • African airlines saw January traffic rise 4.9 percent against a mixed backdrop for the region's largest economies. In Nigeria, business confidence has risen sharply while in South Africa, political uncertainly continues to inflict an economic toll. The region's capacity rose 4.2 percent, and load factor edged up 0.5 percentage point to 70.3 percent.

Domestic demand

Domestic traffic, meanwhile, climbed 5.1 percent in January year-on-year, down from 7 percent growth recorded in December. IATA said the slowdown is entirely attributable to the later Lunar New Year holiday period in 2018.

All markets showed growth, led by India, which experienced its 41st consecutive month of double-digit traffic increases. Domestic capacity increased 5.3 percent and load factor slid 0.2 percentage point to 79.8 percent.

  • China's domestic traffic rose 6.6 percent in January, which was a slowdown compared to 14.1 percent year-over-year growth in December. With the Lunar New Year falling in February, that month is expected to see a big jump in annual traffic growth.
  • Russian domestic traffic grew 7.9 percent compared to January 2017. Traffic is being supported by strong economic conditions, helped by higher oil prices.

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