Global passenger demand sustains robust pace – IATA

Global passenger demand (in terms of Revenue Passenger Kilometers or RPKs) for March remained robust, rising 7.4% versus the same period in 2014, from the residual impact of increased leisure travel before and after the February Lunar New Year celebrations.

Unlike global air freight volumes, which shot up 12.2 percent in February and reverted to a modest 1.6% rise in March, underlying traffic trends confirm that passenger demand stayed strong, according to data from the International Air Transport Association (IATA).

Passenger capacity for the month went up 5.6 percent and load factor climbed 1.3 percentage points to 80 percent. Domestic markets experienced stronger growth than international markets, but both performed well.

"March traffic continues the trend of healthy demand for travel although we may see a softening of demand in the second quarter,” warned IATA Director General and CEO Tony Tyler.

“Regional trade activity in AsiaPacific may be slowing and Eurozone economic weakness continues to disappoint," he added.

Significantly, all regions recorded year-over increases in passenger demand except for Africa.

Asia-Pacific airlines emerged with the highest demand growth, at 11.1 percent. The timing of the Lunar New Year in mid-February accounted for this performance as holiday-related travel continued into early March.

The capacity of Asia-Pacific airlines also rose 7.1%, boosting load factor 2.9 percentage points to 78.5 percent.

However, the underlying trend in air travel on Asia-Pacific carriers is likely to be weaker than performance suggests as regional trade activity appears to be slowing after strong gains in late 2014, according to IATA.

For their part, Middle Eastern carriers demand climbed 9.8 percent in March but capacity growth of 11.9 percent meant that load factor fell 1.5 percentage points to 77.1 percent versus the comparative period.

However, Middle Eastern economies are comparatively well-placed to withstand the drop in oil prices and measures of non-oil-related business activity continue to show improvement.

European carriers’ international traffic climbed 5.4% in March compared to the year-ago period. Capacity rose 3.6% and load factor climbed 1.4 percentage points to 80.8%, highest among the regions.

While the Eurozone is reporting very weak economic expansion, outside the Eurozone, nations like Turkey continue to record strong growth.

North American airlines experienced just a 2.7% traffic rise in March over a year ago, reflecting the maturity of these travel markets. The US economy continues to lead developed economies in performance. Capacity rose 2.1%, edging up load factor 0.5 percentage points to 80.4%.

Latin American airlines’ traffic rose 4.3% in March compared to March 2014. Regional trade volumes have been improving, but the Brazilian economy continues to tread water. Capacity rose 5.5% and load factor slipped 0.9 percentage points to 77.4%.

African airlines endured another month of declining demand, as traffic dropped 1.1% in March compared to a year ago.

The weakness reflects adverse economic developments in parts of the continent including Nigeria, Africa’s largest economy, which is suffering from the collapse in oil prices. Accompanying cuts in capacity of 3.2%, pushed load factor upwards 1.4 percentage points to 65.7%, still the lowest among the regions.

On the other hand, domestic air travel rose 8.0% in March year-on-year, driven by growth in China and India. Capacity rose 6.0% and load factor was 82.0%, up 1.5% percentage points over March 2014.

China’s domestic air travel soared 22% in March compared to a year ago, showing the residual impact of the Lunar New Year celebrations. However, recent data show that Gross Domestic Product (GDP) for the first quarter was 7.0%, which was slightly less than fourth quarter 2014 growth of 7.3%.

India’s airlines saw traffic jump 17.9% in March, likely reflecting market stimulation by local carriers and a strengthening economy.