Geneva
- The International Air Transport Association (IATA) released June
passenger demand figures showing year-on-year growth of 6.0%. The
robust growth, measured in revenue passenger kilometers (RPK), is
ahead of the 4.8% demand growth reported over the first six months of
2013 compared to the same period in 2012. It is also ahead of the
5.6% expansion in capacity for June over the previous year. This
pushed the passenger load factor to 81.7%.
While
the strong growth trend was reflected in all regions it should be
noted that Asia-Pacific airlines were responsible for half of the
increase in RPKs from May to June. Due to the volatility of
Asia-Pacific performance it is too early to say if this acceleration
marks a trend for the rest of the year.
European
airlines were another highlight of the month. They reported a second
consecutive month of solid growth (4.8) reflecting an easing in
recessionary conditions in the Eurozone and an improvement in
business and consumer confidence. And emerging markets were once
again the strongest performers, particularly Africa (10.8%) and the
Middle East (11.0%).
"June
was a positive month for passenger markets. The stability in the
Eurozone, albeit tentative, is giving a boost to business and
consumer confidence. And the load factor at 81.7% shows that airlines
are efficiently meeting increasing demand for travel. But there
are some headwinds. Growth in the BRICS economies, including China,
is slowing. And oil prices remain high. The industry is still on
track to make $4.00 per passenger this year for a global net profit
of $12.7 billion. But there is little margin for error and even a
small change in the second half of the year could shift the outlook
significantly," said Tony Tyler, IATA's Director General and
CEO.
| June 2013 vs. June 2012 | RPK Growth | ASK Growth | PLF |
| International | 5.9% | 5.7% | 81.4 |
| Domestic | 6.1% | 5.2% | 82.0 |
| Total Market | 6.0% | 5.6% | 81.7 |
| YTD 2013 vs. YTD 2012 | RPK Growth | ASK Growth | PLF |
| International | 4.8% | 4.0% | 78.5 |
| Domestic | 4.6% | 3.7% | 79.7 |
| Total Market | 4.8% | 3.9% | 79.0 |
International
Markets Analysis in Detail
International
air travel expanded strongly, up by 5.9% in June compared to a year
ago. June capacity grew in line with this (5.7%) resulting in a June
international load factor of 81.4%.
European
carriers recorded
4.7% growth over the previous June. Capacity increased by 3.4%
pushing load factors to 83.2%.
Asia-Pacific
carriers grew
by 5.5% on international routes, slightly behind the 6.7% growth in
capacity. The load factor stood at 79.0%, the lowest among the major
regions. Slower than expected economic growth in China during the
first half of 2013 coupled with a decline in both trade and export
orders are negatively impacting travel across the region.
Nonetheless, Asia Pacific carriers did account for nearly half of the
May to June growth in RPKs.
North
American airlines grew
3.4% in June year-on-year, ahead of the 3.0% growth in capacity. As a
result of continued tight capacity management, the region recorded
the highest load factor (87.4%). The June performance was a break
from the basically sideways growth of just 1.9% over the first half
of the year. It is unlikely that June will mark the start of a step
change in the growth trend.
Middle
East carriers expanded
12.1% compared to a year ago. This was slightly below the 13.4%
capacity expansion resulting in a load factor of 78.4%. The demand
for new routes to emerging markets in Africa and Asia has fuelled the
growth of the Gulf hubs.
Latin
American airlines recorded
growth of 8.7% in June, ahead of the 7.7% capacity growth. The
region's load factor stood at 79.2%. The June performance was boosted
by strong business-related demand, as the region posted the strongest
trade growth of any region in the second quarter.
African
airlines benefitted
from strong domestic economic growth in key markets such as Ghana,
Nigeria, Ethiopia and the Democratic Republic of Congo, to post
growth of 11.2%. Although African airlines' load factors (70.7%)
still lag the global average by around ten percentage points, they
have made consistent progress to close the gap this year, and in
June, improved their load factor by almost three percentage points
compared to June 2012.
Selected
Domestic Passenger Markets
Total
domestic air travel performed strongly in June, with growth of 6.1%
compared to June 2012, and growth in all major markets. Domestic
capacity expanded by 5.2% leading to a load factor of 82.0%.
The United
States saw
domestic growth of 2.4% in June. This weak growth reflects a
combination of capacity management, a mature market, and the slowdown
in the US economy in Q2. North American carriers posted the highest
domestic load factor at 87.1%.
The Chinese domestic
market grew 14.6% in June and the load factor stood at 81.5%. This
robust performance came despite a reported slowdown in the Chinese
economy in recent months. Declining manufacturing employment may put
pressure on demand in the months to come.
Brazilian domestic
travel was up 3.2% compared to June 2012. This is positive news in a
market that is struggling with a 0.6% contraction over the first half
of the year and the likelihood of continued economic weakness. Load
factors have been a bright spot however, reaching 77.4% in June as
airlines tightly control capacity.
The Indian domestic
market grew 7.7% in June year-on-year, well ahead of a capacity
expansion of 2.6%. Load factors reached 81.5%. Reductions in
domestic fares may be leading to increased demand, but it is
difficult to discern the true strength of the Indian market due to
the volatility of month-to-month traffic.
Russia posted
the second-strongest domestic growth rate in June, up 9.8% on a year
ago. The outlook for the rest of the year looks positive as the
Russian economy looks poised to pick up.
Japan's domestic
market showed a solid rise of 6.9%, reflecting strong momentum in the
country's economy. A milestone was passed, as Japan's air travel
market recovered to pre-tsunami levels. Load factors of 59.5%
however, indicate the continuing challenges in the market.
The
bottom line
"The
half-year report for passenger markets is broadly positive. There is
plenty of evidence to support some cautious optimism. Airlines are
expecting continued growth in demand, but there is little immediate
hope for an improvement in yields. In the short term, cost control
remains high on every airline's agenda. And the longer-term challenge
is to expand value streams to generate sustainable levels of
profitability," said Tyler.
The
July IATA Airline Business Confidence index reported that 61.5% of
respondents expect an improvement in demand. But only half (30.8%)
expect any improvement in yields over the next 12 months.
