Travel demand loses momentum over fragile economies, terror attacks
The International Air Transport Association (IATA), the clearing house for 260 airlines across the globe expressed concern that the demand for air travel is growing at slow pace owing to the fragile and uncertain economic backdrop, political shock and a wave of terrorist attacks that are contributing to a softer demand environment.
This disclosure was made by IATA’s Director General and Chief Executive Officer, Tony Tyler when he announced global passenger traffic data for June showing that demand (measured in revenue passenger kilometers or RPKs) rose by 5.2 per cent compared to the year-ago period.
This was up slightly from the 4.8 per cent increase recorded in May (revised). However, the upward trend in seasonally-adjusted traffic has moderated since January. June capacity, according to IATA (available seat kilometers or ASKs) increased by 5.6 per cent, and load factor slipped 0.3 percentage points to 80.7 per cent.
His words, “The demand for travel continues to increase, but at a slower pace. The fragile and uncertain economic backdrop, political shocks and a wave of terrorist attacks are all contributing to a softer demand environment.”
For the international passenger markets, June international passenger demand rose 5.0 per cent compared to June 2015. All regions recorded growth, led by airlines in Latin America. Capacity climbed 6.4 per cent, causing load factor to slide 1.1 percentage points to 79.4 per cent.
It was not all doom and gloom as African airlines’ traffic climbed 4.7 per cent in June, an indication that the strong upward trend in demand that began in the second half of 2015 has paused.
Capacity rose 7.4 per cent, with the result that load factor slipped 1.7 percentage points to 64.4%, lowest among regions.
Asia-Pacific airlines’ June traffic increased 8.2 per cent compared to the year-ago period. However, most of the growth relates to the strong upward trend in traffic seen in the final months of 2015 and into 2016, with June demand barely higher than in February.
IATA noted that this could be a natural pause, but possibly is also a sign of Asian passengers being put off travel by terrorism in Europe. Capacity rose 7.3 per cent and load factor inched up 0.6 percentage points to 78.2 per cent.
For Europe, European carriers saw demand rise 2.1 per cent, the smallest increase among regions, reflecting the negative impact of recent terrorism.
While demand tends to recover reasonably quickly after such events, the repeated nature of the attacks may have a more lasting impact. Capacity climbed 3.4 per cent and load factor slipped 1.1per cent percentage points to 83.3 per cent.
- Middle Eastern carriers posted a 7.5 per cent traffic increase in June, which was well down on the double-digit growth recorded earlier in the year. In part this could be owing to the timing of Ramadan, which tends to depress traffic growth Capacity rose 14.3 per cent, which caused load factor to dive 4.4 percentage points to 69.9 per cent.
- North American airlines’ demand rose 4.0 per cent compared to June a year ago, which was well up on the 0.5 per cent year-over-year growth recorded in May. Capacity climbed 4.7 per cent, causing load factor to dip 0.6 percentage points to 84.3 per cent, still the highest among regions.
- Latin American airlines experienced an 8.8 per cent rise in demand compared to the same month last year, suggesting that carriers there have flown out of the soft patch seen in the first quarter. Capacity increased by 5.2 per cent and load factor rose 2.7 percentage points to 82.4 per cent.
