IATA reports strong airline passenger demand in July

Global appetite for air travel showed "very strong but moderating growth" this July with total revenue passenger kilometers (RPKs) up 6.8% versus the same period last year but down from 7.7% year-over-year growth recorded in June, according to the International Air Transport Association (IATA).

While capacity, in terms of available seat kilometers or ASKs, increased 6.1% and load factor rose 0.6 percentage points to a record 84.7%, "The stimulus effect of lower fares is softening in the face of rising cost inputs," noted Alexandre de Juniac, IATA’s Director General and CEO.

In Asia-Pacific, passenger traffic rose 5.9% over the year-ago period, a deceleration versus June growth of 8.8%. As with Europe, carriers in the region are seeing a slowing of demand growth. Capacity increased 6.7% and load factor slipped 0.6 percentage points to 81.0%.

Middle East carriers registered 4.5% increase in demand for July from the 3.6% annual growth seen in June. Still, it was well off the 5-year average pace of 11.2%.

A combination of factors, including the recently-lifted cabin ban on large portable electronic devices and proposed travel bans to the US affected the Middle East to North America market.

Already, traffic growth on the Middle East-US route slowed down early this year with the moderate pace of expansion of nonstop services flown by the largest Middle Eastern airlines. July capacity climbed 3.6% compared to a year ago and load factor rose 0.7 percentage points to 81.5%.

On the other hand, North American airlines’ traffic climbed 3.5% compared to July a year ago, down from 4.4% growth in June, but still ahead of the 5-year average pace of 2.9%.

While a strong economy supports outbound travel in North America, additional security measures in place for travel to the US negatively affects inbound demand. July capacity rose 3.8% with the result that load factor slipped 0.3 percentage points to 85.9%.

Latin American airlines recorded the strongest growth among regions, posting a 10.5% demand rise compared to July, 2016. Capacity increased almost as fast, up 10%, and load factor climbed 0.4 percentage points to 84.9%.

International volumes between North and Central America continue to rise while traffic on the North-South America market segment has also started to increase, boosted by the healthier, albeit still fragile, Brazilian economy

European carriers posted a 7.5% rise in traffic for July compared to a year ago, down from 8.8% annual growth in June. Capacity rose 5.9%, and load factor climbed 1.3 percentage points to 88.7%, highest among the regions.

While Europe's economy has strengthened, the growth in travel demand has been moderate since February.

African airlines experienced a 6.5% increase in traffic compared to a year ago, down from 9.8% demand growth in June. Capacity rose 1.7%, and load factor jumped 3.4 percentage points to 74.1%. Conditions in the region’s two largest economies continue to diverge, with South Africa in recession while business confidence levels are at a twoyear peak in Nigeria.

For its part, domestic travel demand grew by 7.9% year-on-year in July, in line with 8.0% growth recorded in June.

With the exception of Australia, all markets recorded annual increases. China led all markets, with a 15.0% growth. Domestic capacity climbed 7.1%, and load factor rose 0.6 percentage points to 85.0%.

China’s domestic traffic surged 15% in July. Although this was down from the 17.2% growth in June, the trend line remains strong, with the latest second quarter GDP figures coming in better than expected. Demand is also being supported by supply factors including a near 15% increase in the number of unique airport-pair routes this year compared to last.

Australia’s traffic slipped 0.8% year-on-year but with a 1.9% decline in capacity, load factor actually rose 0.9 percentage points to 80.1%. This marked the first time since 2009 in which the July load factor came in above 80%.

"As the first full month in the summer peak travel season, July is a bellwether month and demand continues to be very strong. People want to travel and aviation connectivity is vital to the smooth functioning of the global economy," De Juniac acknowledged. Nevertheless, "The economic and social benefits that aviation brings need to be supported by adequate, affordable airport and air traffic management infrastructure."

"To do this effectively, governments must include aviation’s requirements as part of their national economic strategy," he underscored.