Passenger demand growth accelerates in April. Friday, 30th May 2014 Source : International Air Transport Association
The IATA announced global passenger traffic results for April showing a healthy increase in demand, total revenue passenger kilometers (RPKs) rose 7.5% compared to April 2013, an improvement over March growth of 2.9%.
The year-on-year comparison is somewhat biased by the timing of the Easter holiday, which occurred in April 2014, a month later than in 2013. April capacity increased 5.8%, propelling load factor up 1.2 percentage points to 79.4 %.
“April’s demand growth was a pleasant surprise in the face of the moderating trend of recent months but it is not clear whether the acceleration in demand is sustainable in view of global economic trends including slower growth in China,” said Tony Tyler, IATA’s Director General and CEO.
International Passenger Markets
April international passenger demand was up 8.5% compared to the year-ago period with airlines in all regions recording growth and the strongest gains among Middle East carriers. Capacity rose 6.9% and load factor climbed 1.2 percentage points to 79.0%.
Asia-Pacific carriers’ traffic rose 6.7% compared to the year-ago period but capacity rose 7.7% and load factor slipped 0.7 percentage points to 75.7%. Economic conditions in the region do not support further acceleration in demand growth, with China continuing to show weakness and Japan starting to see some reversal of previous growth momentum. In Japan, a recent sales tax increase caused indicators for economic activity to decline sharply in April.
European carriers saw demand climb 7.9% in April versus April 2013. Economic activity in the Eurozone continues to improve, albeit at rates that are below expectations. Capacity rose 5.4% and load factor climbed 1.9 percentage points to 81.4%, the highest for any region.
North American airlines experienced a 4.9% rise in traffic compared to April a year ago. Capacity rose 3.3% pushing load factor up 1.2 percentage points to 80.8%. Data suggest that underlying growth trends in business activity are positive and downward pressure on employment is easing, which should support stronger growth in air travel demand in coming months.
Middle East carriers’ demand soared 18.6% in April, easily the strongest growth for any region. Capacity climbed 13.1% and load factor jumped 3.8 percentage points to 80.8%. Airlines in the Middle East continue to benefit from the strength of regional economies and solid growth in business-related premium travel.
Latin American airlines’ traffic rose 8.2% compared to April 2013. The outlook for Latin American carriers remains broadly positive, with continued robust performance of economies such as Colombia, Peru and Chile, and the upcoming demand to be generated by the FIFA World Cup in Brazil. On the downside, however, trade volumes have made no progress this year compared to the highs reached at the end of 2013, suggesting that acceleration in business-related travel is unlikely in the near term. Capacity rose 5.2% and load factor climbed 2.2 percentage points to 79.1%.
African airlines had the weakest demand growth, with traffic up 3.9% compared to April 2013, while capacity rose 8.1%, resulting in a 2.7 percentage point drop in load factor to 66.2%, the lowest load factor for any region. The weakness could be in part reflecting adverse economic developments in some parts of the continent, including the slowdown of the major economy of South Africa.
Domestic Passenger Markets
Domestic travel demand rose 5.8% in April compared to April 2013, with the strongest growth occurring in Brazil, China and Russia. The timing of the Easter holiday, which fell in April this year and in March a year-ago, had a positive influence on comparisons in some markets. Total domestic capacity was up 3.9%, and load factor rose 1.4 percentage points to 80.2%.
Brazil, China and Russia saw near or above double digit, with economic growth significant enough in China and Russia to sustain strong expansion in domestic air travel. Growth in Brazil was also very strong. Although economic fundamentals do not support the acceleration seen in 2014 so far, there could be some positive impacts of preparation for the FIFA World Cup.
Japan’s domestic air travel market saw demand rise 5.4% in April compared to a year ago, but this is a slowdown on growth year-to-date (7.9%). An increase in the sales tax could erode some of the previous progress made by the government to boost growth and domestic consumption. It has appeared to already have weakened the demand base for air travel.
The Bottom Line:
"In just a few days, the world air transport community will gather in Doha, Qatar for the 70th IATA Annual General Meeting. The strong demand for air travel recorded in April reinforces aviation’s importance as an enabler of global economic growth and job creation, while the slowdown in Japan’s demand growth illustrates the sensitivity of the sector—and the economic benefits that it provides—to taxes.
All those visiting the Gulf for the AGM will have a unique opportunity to see the potential for aviation to drive development when in a business-friendly environment and with the right infrastructure,” Tyler said.
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