IATA: Slowing Passenger Growth Trend Continues

The International Air Transport Association (IATA) announced global traffic results for June showing a continued slowing of growth in the demand for air transport. This is in line with weakness in business and consumer confidence.

Year-on-year, demand for air travel in June expanded by 6.2 percent. Capacity grew by a much more cautious 4.5 percent leaving load factors at 81 percent. While this appears to be a healthy growth rate, the growth trend since early 2012 has seen a slowdown. This is illustrated by isolating the February through June trend which shows 2 percent annualized growth. That is a major slowdown from the 8 percent annualized growth rate experienced from mid-2011 through to January 2012.

June air freight volumes recorded a 0.8 percent increase compared to the previous year. This brings seasonally adjusted June demand about 2.5 percent above the low reached in the fourth quarter of 2011. The global picture masks strong growth for Middle East airlines (17.9 percent) and the improvement in North American air freight demand.

June demand in international passenger markets was up 7.4 percent on the previous year. The growth trend, however, shows little promise. While passenger markets experienced strong growth through to the end of 2011, this has slowed continuously in 2012. For example, from May to June 2012 demand was up just 0.2 percent. When looked at over the second quarter of 2012, the trend in international air travel has been an annualized growth rate of just over 2 percent.

European airlines experienced strong growth in June (7.3 percent), well ahead of the May result (4.3 percent). Given the continuing economic uncertainty centered on Europe, the strong June performance is more likely a result of volatility in weak market conditions. The previous few months had seen the growth trend flatten out, after a solid 6 percent annualized growth rate from mid-2011 through the first quarter of 2012. Capacity was up 4.9 percent and load factors stood at 82.5 percent.

North American airlines saw 1.6 percent growth in demand while capacity was cut by 0.3 percent compared to the previous June. This pushed the load factor to 86.9 percent which was the highest among the regions. Compared to May there was basically no growth with the region’s airlines reporting a 0.1 percent decline in demand.

Asia-Pacific carriers reported a 6.0 percent growth in demand which was more than double the 2.9 percent expansion in capacity for June, when compared to the same month in 2011. The load factor for the region’s carriers stood at 79.5 percent. Month-to-month, the demand in the region was basically flat at -0.1 percent.

The growth trend for the region is similar to that of the overall market. From mid-2011 to the start of 2012, Asia-Pacific carriers experienced a 9.5 percent annualized growth in demand. That has slowed to 2 percent for the February to June period.

Middle East carriers were the strongest performers with demand growth of 18.2 percent outstripping a capacity expansion of 13.4 percent. Load factors stood at 78.6 percent. In contrast to the overall market, the growth trend in this region has been robust throughout 2012, gaining a further 1.9 percent in June compared to May.

Latin American airlines also performed well in June, recording an 11.2 percent gain in demand compared to the previous year. Demand growth slightly outpaced a capacity expansion of 10.7 percent, but load factors were among the weakest at 77.4 percent.

African carriers showed growth of 10.1 percent, slightly behind a capacity expansion of 10.6 percent. At 65.0 percent, the region’s load factor was the weakest.