Airlines make gains as traffic surges by 3.8 per cent

Airlines have recorded a marginal rise in gains as passenger traffic surged by 3.8 per cent in August.

The International Air Transport Association (IATA), in the global passenger traffic data for August 2019 released yesterday, showed that demand climbed 3.8 per cent compared to the year-ago period.

This was above the 3.5 per cent annual increase for July. August capacity increased by 3.5 per cent. Load factor climbed 0.3 percentage point to 85.7 per cent, which was a new monthly record, as airlines continue to maximise asset use.

African airlines’ traffic climbed 4.1 per cent in August, up from 3.2 per cent in July. This solid performance comes after South Africa – the region’s second largest economy – returned to positive economic growth in Q2 2019. Capacity rose 6.1 per cent, however, and load factor dipped 1.4 percentage points to 75.6 per cent.

IATA’s Director General and Chief Executive Officer (CEO), Alexandre de Juniac, said despite the pick-up in passenger demand, growth remains below the long-term trend and well-down on the roughly 8.5 per cent annual growth seen over the 2016 to Q1 2018 period.

“This reflects the impact of economic slowdowns in some key markets, uncertainty over Brexit and the trade war between the U.S. and China. Nonetheless, airlines are doing a great job of matching capacity to demand. With passenger load factors reaching a new high of 85.7 per cent this is good for overall efficiency and passengers’ individual carbon footprint,” de Juniac said.

August international passenger demand rose 3.3 per cent compared to August 2018, improved from a 2.8 per cent year-over-year growth achieved in July. With the exception of Latin America, all regions recorded increases, led by airlines in Africa. Capacity climbed 2.9 per cent, and load factor edged up 0.3 percentage point to 85.6 per cent.

Asia-Pacific airlines’ August traffic increased 3.5 per cent compared to the year-ago period, which was an acceleration compared to a 2.6 per cent rise in July.

However, this remains well below the long-term average growth rate of around 6.5 per cent, reflecting slowing economic growth in India and Australia as well as the impact of trade disputes. Capacity rose 3.9 per cent and load factor slid 0.4 percentage point to 82.8 per cent.

European carriers saw August demand climb 3.7 per cent year-to-year, fractionally up over a 3.6 per cent increase for July. Capacity rose 3.4 per cent, and load factor climbed 0.2 percentage point to 89.0 per cent, which was the highest among regions.

Slowing economic growth in key markets such as the UK and Germany, as well as uncertainties and disparate business confidence outcomes are behind the softer conditions for the continent’s air carriers.

Middle Eastern airlines posted a 2.9 per cent traffic increase in August, which was an increase from a 1.7 per cent rise in July. While this was better than the average of the past 12 months, it remains far below the double-digit growth trend of recent years.

Falling business confidence in parts of the region, combined with some key airlines going through a process of structural change and geopolitical tensions are all likely to be contributing factors. Capacity increased 1.3 per cent, with load factor rising 1.3 percentage points to 82.4 per cent.

North American carriers’ international demand rose 2.5 per cent compared to August a year ago, up from a 1.4 per cent increase in July. Capacity rose 1.3 per cent, and load factor grew by 1.0 percentage point to 88.3 per cent. As with the Middle East and Asia Pacific, this performance represents an improvement from July, but remains relatively soft compared to long-term norms, most likely reflecting trade tensions and slowing global demand.