July passenger traffic growth moderates but airlines fill more seats

September 07, 2017
airlne check-in passenger growth
Passengers wait to check in. (AP Photo/Michael Dwyer, File)

Global passenger traffic growth moderated in July but airlines managed to fill a bigger proportion of aircraft seats to produce a record load factor for one of the crucial months of the northern summer season.

The 6.8 per cent increase was down from June’s 7.7 per cent year-on-year growth, reinforcing recent observations by the International Air Transport Association about demand moderating.

This was ahead of capacity growth and saw the load factor rise 0.6 percentage points to a July record of 84.7 per cent.

International passenger demand was up 6.2 per cent compared to July, 2016, with all regions reporting solid growth.

“As is evidenced by the record high load factor in July, the appetite for air travel remains very strong,’’ IATA director general Alexandre de Juniac said.

“However, the stimulus effect of lower fares is softening in the face of rising cost inputs. This suggests a moderating in the supportive demand backdrop.”

A regional breakdown showed Latin America posting the strongest international  traffic growth rate with a 10.5 per cent demand rise compared to last year.

A stronger but still fragile Brazilian economy helped boost volumes between North and South America while traffic between North and Central America continued to trend strongly upward, IATA said.

European carriers posted a 7.5 per cent rise compared to a year ago and the highest load factor among the regions of 88.7 per cent.

However, IATA noted that the upward growth in travel demand had moderated sharply since February.

The Asia-Pacific saw a July traffic rise of 5.9 per cent compared to last July, down from June growth of 8.8 per cent.

“As with Europe, carriers in the Asia-Pacific region are seeing a slowing of demand growth,’’ IATA said. “Capacity increased 6.7 per cent and load factor slipped 0.6 percentage points to 81.0 per cent.’’

North American traffic climbed 3.5 per cent, down from a 4.4 per cent increase in June, but still ahead of the five-year average.

“Outbound travel is being supported by the relatively solid economic backdrop in North America; however, anecdotal evidence suggests that inbound demand is being negatively influenced by the additional security measures in place for travel to the US,’’ IATA said

Middle East carriers saw an acceleration in the rate of traffic growth from 3.6 per cent in June to 4.5 per cent in July.

The Middle East-North America market was affected by the decision to lift the electronics ban but negatively influenced by additional security measures.

African airlines experienced 6.5 per cent traffic growth, down from 9.8 per cent in June. IATA noted the continent’s two biggest economies continued to diverge with South Africa in a recession and Nigerian business confidence at a two-year high.

Domestic travel demand grew by 7.9 per cent in July, only slightly behind June’s 8 per cent growth, with only Australia failing to record an annual increase.

China led the field with 15 per cent growth and slight increase in load factor to 85 per cent.

READ: Boeing boosts expectations for Chinese fleet.

“Australia’s traffic slipped 0.8 per cent year-on-year but with a 1.9 per cent decline in capacity, load factor actually rose 0.9 percentage points to 80.1 per cent,’’ IATA said.

“This marked the first time since 2009 in which the July load factor came in above 80 per cent.’’

Passenger traffic growth was outpaced by an 11.4 per cent growth in global freight in July – almost four times higher than the 10-year average growth rate of 3.1 per cent.

IATA attributed the surge to “an uptick in global trade, rising export orders and upbeat business confidence indicators”.

But it warned there were signs demand growth for air freight could be nearing a peak.

“Seasonally-adjusted air freight volumes were flat in June and fell in July; and the global inventory-to-sales ratio has stabilized,’’ it said

“Air cargo often sees a boost in demand at the beginning of an economic upturn as companies look to restock inventories quickly. This tapers as inventories are adjusted to new demand levels.”