Air Freight Markets Grow, Passenger demand growth slows in April - Brussels Attacks Disrupt European Traffic

- Dublin, Ireland.

Freight

The International Air Transport Association (IATA) released demand growth results for global air freight markets for April 2016 showing a 3.2% increase in demand measured in freight tonne kilometers (FTKs) compared to the same period last year. Yields remained pressured as April freight capacity (measured in available freight tonne kilometers or AFTKs) increased by 6.6% year-on-year. 

The increase in demand was broad-based across all regions with the exception of Latin America. The strongest growth occurred in the Middle East and Europe, with April demand up by 7.7% and 6.8%, respectively, compared to the same period last year.

While growth appears to be stronger than in the preceding months of 2016, this is largely due to the disappearance from the comparison data of distorting factors associated with the 2015 strike at seaports on the US West Coast.

Overall, the demand for air cargo remains soft and lags behind the relatively robust growth on the passenger side of the business. This is largely driven by weak world trade. The first quarter of 2016 saw the first annual decline in trade volumes since the global financial crisis in 2009, and the World Trade Organization (WTO) predicts only sluggish growth for the remainder of 2016.

“While the April uptick in demand growth for air cargo is encouraging, the overall economic environment is not. The decline in global trade does not bode well for air cargo markets in the months ahead,” said Tony Tyler, IATA’s Director General and CEO.

April 2016
(% year-on-year)

World share¹

FTK

AFTK

FLF
(%-pt)²   

FLF
(level)³  

Total Market     

100.0%

3.2%       

6.6%

-1.4%      

43.5%

Africa

1.5%

0.0%         

24.3%

-6.1%

25.2%

Asia Pacific 

38.9%

0.1%

2.8%

-1.4%

52.5%

Europe         

22.4%

6.8%

5.6%

0.5%

45.9%

Latin America             

2.8%

-5.9%

-0.7%

-2.0%

36.7%

Middle East             

14.0%

7.7%

11.0%

-1.3%

41.8%

North America       

20.5%

4.0%

9.2%

 -1.7%

34.1%

¹% of industry FTKs in 2015   ²Year-on-year change in load factor   ³Load factor level 

Regional Analysis in Detail

  • Asia-Pacific airlines’ demand for air cargo was basically flat with a 0.1% rise in April compared to last year. Capacity expanded 2.8%. The largest factor impacting this stagnation is weak trade—globally and in the region.
  • North American carriers experienced a significant upward swing in year-on-year performance as the exaggerated effects of last year’s US seaport disruption wore off. Demand grew by 4% in April 2016 compared to the same period last year, significantly better that the 0.8% drop the previous month.
  • European airlines witnessed a 6.8% increase in freight volumes in April 2016, the highest growth since November 2013. The strong European performance corresponds with an increase in export orders in Germany over the last few months. Despite European cargo demand trending upwards, performance remains weak in historical terms. Seasonally adjusted demand in April 2016 was only 1.5% higher than mid-2011. 
  • Middle Eastern carriers saw demand expand by 7.7% and capacity rise 11.0% in April 2016 compared to the same period last year. Although carriers in the region continued to report the fastest growth in aggregate, the April growth rate was about half that recorded in April 2015. This reflects both a slowdown in network expansion by the region’s main carriers over the past six months and weak trading conditions. 
  • Latin American airlines reported a decline in demand of 5.9% and a drop in capacity of 0.7%, as economic conditions continued to worsen, particularly in the region’s largest economy, Brazil.
  • African carriers saw flat-line freight growth in April 2016 compared to the same period last year. Notably, on the back of long-haul expansion, the capacity for African airlines surged by 24.3% year-on-year. This is more than double the pace of any other region in recent months.

 

 

Passenger

The International Air Transport Association (IATA) announced global passenger traffic data for April showing that demand (measured in total revenue passenger kilometers or RPKs) rose by 4.6%--the slowest pace since January 2015. April capacity (available seat kilometers or ASKs) increased by 4.9%, and load factor slipped 0.3 percentage points to 79.1%.
The disruptive impact of the Brussels Airport attack weighed on the April figures. IATA estimates that, absent the impact of the attacks, demand growth would have been around 5%.
“The disruptive impacts of the Brussels terror attacks will likely be short-lived. There are some longer-term clouds over the pace of demand growth. The stimulus from lower oil prices appears to be tapering off. And the global economic situation is subdued. Demand is still growing, but we may be shifting down a gear,” said Tony Tyler, IATA’s Director General and CEO. 

April 2016
(% year-on-year)

World share¹

RPK

ASK

PLF
(%-pt)²         

PLF
(level)³  

Total Market

100.0%

4.6%

4.9%

-0.3%      

79.1%

Africa

2.2%

8.6%

9.5%

-0.5%

67.7%

Asia Pacific

31.5%

7.3%

7.0%

0.2%

78.4%

Europe

26.7%

1.9%

1.8%

0.1%

79.8%

Latin America

5.4%

-1.2%

-0.7%

-0.4%

78.3%

Middle East

9.4%

12.2%

14.7%

-1.7%

75.7%

North America

24.7%

1.9%

2.4%

 -0.4%

82.3%

   ¹% of industry RPKs in 2015   ²Year-on-year change in load factor   ³Load factor level   

International Passenger Markets
April international passenger demand rose 4.8% compared to April 2015, the slowest pace in two years. Airlines in all regions recorded growth, led by the Middle East region. Total capacity climbed 5.6%, causing load factor to slip 0.6 percentage points to 77.8%.

  • Asia-Pacific airlines’ April traffic increased 6.4% compared to the year-ago period. Slower economic growth in many of the region’s economies has been at least partly offset by an increase in direct airport connections that has helped to stimulate demand. Capacity rose 6.8% and load factor dipped 0.3 percentage points to 77.3%.

    Brussels Attacks Disrupt European Traffic   

  • European carriers saw demand rise just 1.8% in April, which was well down on the 6.0% growth recorded in March. This reflects the impact of the Brussels terror attacks, which closed the airport for nearly two weeks. Capacity climbed 2.4% and load factor slipped 0.5% percentage points to 80.2%, which still was the highest among the regions.

  • Middle Eastern carriers posted a 12.7% traffic increase in April, the only region to see a double-digit percentage increase in demand. Capacity growth of 14.8% outstripped this rise, however, which caused load factor to fall 1.4 percentage points to 75.6%.
       
  • North American airlines’ traffic rose 1.1% compared to April a year ago, the smallest increase among regions. Capacity climbed 0.9%, causing a 0.1 percentage point rise in load factor to 78.3%. While the recent downward slide in international traffic growth paused in April, traffic levels remain below July 2015 on a seasonally-adjusted basis.
       
  • Latin American airlines experienced a 3.1% rise in April demand compared to the same month last year. Capacity increased by 2.9% and load factor edged up 0.1 percentage points to 77.7%. The upward trend in international traffic growth that characterized 2015 has paused even as the downward trend in domestic traffic for the region’s carriers has accelerated.
       
  • African airlines’ traffic climbed 9.9% in April. Capacity rose 11.1%, with the result that load factor slipped 0.7 percentage points to 66.3%, lowest among regions. The continued turnaround of the carriers coincides with expansion of long-haul networks by the region’s airlines.

Domestic Passenger Markets 
Demand for domestic travel climbed 4.1% in April compared to April 2015, while capacity increased 3.8%, causing load factor to rise 0.3 percentage points to 81.4%. All markets reported demand increases with the exception of Brazil, which showed a 12.1% decline, reflecting the country’s ongoing economic recession and political turmoil.   

April 2016
(% year-on-year)

World share¹

RPK

ASK

PLF
(%-pt)²         

PLF
(level)³  

Domestic

36.4%     

4.1%

3.8%    

0.3%      

81.4%

Australia

1.1%

2.4%

-1.1%

2.8%

78.9%

Brazil 

1.4%

-12.1%

-10.4%

-1.5%

79.6%

China P.R             

8.4%

9.5%

9.4%       

0.1%

81.8%

Indian             

1.2%

21.8%

21.3%

0.4%

84.3%

Japan             

1.2%

0.7%

-2.4%

2.1%

65.8%

Russia Fed.             

1.3%

1.9%

-9.6%

8.6%

75.9%

US

15.4%

2.4%

3.3%

 -0.7%

84.5%

¹% of industry RPKs in 2015   ²Year-on-year change in load factor   ³Load factor level  *Note: the seven domestic passenger markets for which broken-down data are available account for 30% of global total RPKs and approximately 82% of total domestic RPKs

  • China’s airlines recorded 9.5% domestic traffic growth, a strong rebound from the 3.3% increase recorded in March. Fears about slowing economic growth in the country have eased somewhat and increased growth in frequencies is helping stimulate demand.
  • India’s domestic traffic soared 21.8%, marking the 20th month of double-digit traffic growth and the 13th consecutive month it has led the domestic markets. Growth is being propelled by the comparatively strong economic backdrop as well as by substantial increases in service frequencies.

IATA AGM: In just a few days, commercial aviation’s center of gravity will shift to Dublin, Ireland, for IATA’s 72nd Annual General Meeting and World Air Transport Summit (1-3 June, 2016). The threat of terrorism, cyber security and climate change are high on the agenda. The event is open to accredited journalists. 

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www.iata.org
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