How terror attacks reduced European airlines’ traffic by 1.6%-IATA

The International Air Transport Association (IATA), the clearing house for over 280 global airlines disclosed that terrorist attacks in Western Europe in late-2015 and early-2016 reduced European airlines’ international passenger traffic by an estimated 1.6% in the following year compared to what would otherwise have happened.

It estimated that this reduced European airlines’ 2016 revenues by around $2.5b, adding that by contrast to previous major shock events such as after 9/11, the impact has been only temporary.

The group stated that European carriers were hit the hardest, stressing that the most visible impact of the terrorist attacks in Western Europe in late-2015 and early-2016 was on international RPKs flown by European carriers; such traffic fell below its trend level following the Paris attacks in November 2015.

 International RPKs, it noted started to rise again immediately afterwards in seasonally adjusted (SA) terms, but the upward trend was interrupted following the Brussels bombing in March 2016.

Given that  European airlines’ international traffic accounts for around 24 per cent of industry-wide RPKs, this impact was felt at a global level too: the SA upward trend in industry-wide RPKs moderated during H1 2016.

European airlines’ international traffic only started recovering fully from June 2016 onwards, when it began growing faster than its trend pace.

This was helped by a pick-up in global and regional economic conditions, as well as broader stimulus from lower airfares.

All told, European airlines’ international traffic had recovered above its trend level by the end of 2016.

 At a route-level, IATA noted that there is still a lingering impact on the Europe-Asia market (outbound travel from Asia is known to be particularly sensitive to shock events); while recovering, RPKs flown between Europe and Asia are still not back to where they would have been if they had followed the SA trend in place ahead of the terrorist events.

By contrast, the level of international travel within Europe has since fully recovered back to its ‘pre-attacks’ trend level.

“Overall, we estimate that European airlines’ international traffic was around 1.6 per cent lower in the year following the attacks than it would have been in the absence of such events. All else equal, we estimate that this reduced European airline revenues in 2016 by around $2.5 billion”, IATA stated.

IATA however stated that it is difficult to judge what impact this had at a global level because at least some travel would have been displaced, but noted that in the absence of the disruption caused by terrorist attacks, industry-wide RPK growth may have been up to 0.4 percentage points faster than the 7.4 per cent pace registered in 2016.