Global passenger traffic growth slowed down modestly in June compared to the prior month, the International Air Transport Association (IATA) said.
Total revenue passenger kilometers (RPKs) rose 4.7 percent over the year-ago period, which was below the 6.2 percent year-on-year increase recorded in May 2014. June capacity (available seat kilometers or ASKs) increased by 5.0 percent, causing load factor to slip 0.2 percentage points to 81.5 percent.
Middle East carriers’ demand jumped 10.8 percent in June, the largest increase for any region and reflecting the continued strength of regional economies and solid growth in business-related premium travel. Capacity climbed just 5.9 percent, propelling load factor up 3.7 percentage points to 82.1 percent.
“June traffic growth at 4.7 percent is encouraging even though it is a slight weakening on May’s performance. Earlier signs of a softening in demand are dissipating. While that’s good news there are many risks in the political and economic environment that need careful monitoring,” said Tony Tyler, IATA’s Director General and CEO.
June international passenger demand rose 5.5 percent compared to the same month last year, with airlines in all regions except Africa recording growth and the strongest gains among Middle East carriers. Capacity climbed 5.7 percent and load factor dipped 0.2 percentage points to 81.4 percent.
European carriers saw demand increase 5.6 percent in June versus June 2013. Capacity rose 5.3 percent and load factor climbed 0.3 percentage points to 83.8 percent.
Asia-Pacific carriers’ traffic rose 4.9 percent compared to the year-ago period but capacity rose 6.7 percent and load factor slipped 1.3 percentage points to 77.9 percent. The outlook for this region looks broadly positive, with measures of manufacturing activity and export orders pointing to better performance of China.
North American airlines experienced a 3.1 percent rise in traffic compared to June a year ago. Capacity rose 5.9 percent, however, which caused load factor to fall 2.2 percentage points to 85.1 percent, which still was the highest among the regions. Recent data from the US suggest that underlying growth trends in business activity are positive and the unemployment rate is showing improvement.
Latin American airlines’ traffic rose 7.1 percent compared to June 2013. Capacity rose 6.6 percent and load factor climbed 0.4 percentage points to 79.5 percent. While growth was solid, it was below the 8.1 percent annual result for 2013. Part of the softness is owing to a significant reduction in capacity this year compared to last as well as sluggishness in major economies and consequently, regional trade growth.
African airlines saw a 2.7 percent reduction in demand in June, while capacity climbed 2.0 percent, resulting in a 3.3 percentage point drop in load factor to 67.3 percent, the lowest load factor for any region. The weakness could be attributable to adverse economic developments in some parts of the continent, including the slowdown of the major economy of South Africa.
Domestic travel demand rose 3.4 percent in June compared to June 2013, with the strongest growth occurring in Russia and China. Total domestic capacity was up 3.8 percent, and load factor slid 0.3 percentage points to 81.7 percent.
Moreover, the global airfreight markets showed a 2.3 percent growth in demand (measured in freight ton kilometers) over June 2013, but slower than the 4.9 percent growth reported for May, IATA data also showed.
Nevertheless, overall growth for the first six months of 2014 stands at 4.1 percent compared to the same period in 2013. That is much stronger than the weak 1.4 percent increase reported for the full-year 2013 over 2012 levels. The strengthened growth has been underpinned by improving global trade and stronger business activity over the past year.
“At the half-way point of the year, it is clear that overall cargo demand is much stronger than in 2013. Carriers in Asia-Pacific and the Middle East have been the biggest beneficiaries of the improved market conditions. Europe is doing reasonably well, albeit still in recovery mode. The weak spot is the Americas,” said Tyler.
“The general improvement in the economic environment is always good news for air cargo. This may not however, be a recovery as usual. First there are a lot of risks out there—from conflicts and sanctions to potential national defaults and fear of the Ebola outbreak. Second, while air cargo is slowly emerging from two years in the doldrums time has not stood still. Logistics has become an even more intensely competitive sector. Shippers value faster end-to-end transit times, greater reliability and improved efficiency. More clearly than ever, the building blocks for the future of air cargo are found in global programs such as e-Freight and Cargo 2000. These are helping the entire value chain to deliver on the expectations of their customers,” said Tyler.
Asia-Pacific airlines’ freight volume grew 4.9 percent in June, continuing the trend of strengthening results following the declines in the first quarter of the year. For the year-to-date, Asia-Pacific cargo is up 4.6 percent, and with Chinese manufacturing expanding again for the first time since December 2013, growth looks set to continue. Capacity expanded 4.3 percent.
European carriers saw freight volumes fall 1.5 percent compared to June 2013, possibly reflecting recent weakness in manufacturing and export activity. Overall, for the year-to-date, European cargo is up 3.2 percent, a stronger performance than in 2013. Capacity in June rose 2.1 percent.
North American airlines’ freight volumes declined 0.1 percent, compared to June 2013, and for the year-to-date are up just 1.6 percent. The overall performance may reflect the weakness in trade volumes that followed the severe weather events in the first quarter. Recent data points to much stronger business activity which could support stronger air cargo volumes in the months ahead. Capacity in June fell 1.0 percent.
Middle East carriers continue to expand strongly. Air cargo growth was 7.0 percent in June and is up 10.0 percent for the year-to-date. Airlines in the region are capitalizing on growth opportunities by expanding services to fast-growing emerging markets, such as Uganda and Mexico. Capacity expanded 8.6 percent year-on-year.
Latin American airlines suffered a sharp contraction of 3.4 percent in June. The overall performance for the year-to-date has also been a disappointing -0.1 percent, the only region to be in decline this year. Sluggish trade growth and in particular the weakness of the Brazilian economy is dragging down growth. Capacity in June was up by 1.6 percent.
African carriers grew 4.8 percent in June, much stronger than the year-to-date average of 3.1 percent. Growth has been affected by a slowdown in some African economies, notably South Africa. Improving trade data, however, points to a more optimistic outlook for the rest of the year. Capacity grew 0.3 percent in June, year-on-year.© Copyright - Saudi Gazette