2018 Passenger Growth to Stay above Trend, Says IATA

The International Air Transport Association (IATA) has said that worldwide air passenger traffic was up 8% year-over-year (YOY) in November last year, the sector’s strongest rise in five months, according to IATA’s November Air Passenger Market Analysis.

It said that for the first 11 months of 2017, passenger traffic increased 7.7% over 2016, considerably ahead of the 5.5% ten-year average pace.

“We expect another year of above-trend passenger growth in 2018 as a whole, albeit at a slower pace than seen in 2017,” IATA senior economist David Oxley said, citing increases in airline input costs such as fuel prices and labor costs in certain countries. “We are unlikely to see the same degree of stimulation to demand from lower airfares in 2018 than we have in recent years.”

Oxley noted that as of Jan. 11, oil prices are their highest level since May 2015, and over 50% higher than in mid-2017.

Global passenger capacity increased 6.3% in November; the overall passenger load factor rose 1.2 points YOY to 80.2%, a record high for the month.

“November’s strong demand gives the industry momentum. The number of unique city-pair connections now tops 20,000. Passengers not only have more travel choices than ever, the cost of travel in real terms has never been cheaper” IATA DG and CEO Alexandre de Juniac said. “[With] airlines … rewarding their shareholders with normal levels of profitability, we expect 2018 to be the fourth year in a row where the industry’s return on invested capital will exceed the cost of capital.”

Asia-Pacific airlines had the strongest pickup in international passenger traffic, rising 10.8% YOY, its fastest pace in seven months. European international traffic was up 7.9%, with business confidence in the region having recently risen to its highest level in seven years, Oxley said. African airlines also had a 7.9% rise in international passenger traffic during the month, boosted by improving business confidence in Kenya and Nigeria (and despite falling economic activity in South Africa). Latin American international traffic was up 7.2%, as capacity in the region increased 7.2%, keeping its load factor flat at 81.9%. North American international traffic was up 6.4%, with outbound demand strong but incoming traffic hampered by an increase in imposed security measures. Middle East international traffic grew 4.2% during the month; Oxley noted that the Middle East market segment to and from North America was the only main international market-tracked by IATA to have not grown in annual terms in 2017.

In domestic traffic, India and China continued to show robust double-digit growth (16.4% and 14.1%, respectively), supported by sustained increases in living standards and increased travel options for passengers, Oxley said. The US and Japan both showed signs of recovery from natural disasters that affected both countries between August-October with a 4.9% and 6.7% rise in domestic passenger traffic, respectively. In Brazil, domestic traffic was up 6.2%, as seasonally adjusted traffic growth continues its upward trend and is now near mid-2015 levels, IATA said. Russia saw 7.6% domestic passenger growth in November, continuing a rise that resumed in September.