IATA: Moderate Slowdown in Passenger Demand Growth; Air Cargo Peak Season off to Slow Start
The International Air Transport Association (IATA) announced global passenger traffic data for October 2019 showing that demand (measured in total revenue passenger kilometers or RPKs) climbed 3.4% compared to the year-ago period. This was a modest slowdown from 3.9% growth recorded in September, owing to softer traffic performance in domestic markets. October capacity (available seat kilometers or ASKs) increased by 2.2% and load factor climbed 0.9 percentage point to 82.0%, which was a record for October.
“Traffic growth continues to be depressed compared to historical long-term growth levels, reflecting continued moderating economic activity in some key markets and sagging business confidence. However, the fact that traffic is growing is a positive, and the industry continues to do an excellent job of maximizing asset efficiency, as shown in the record load factor,” said Alexandre de Juniac, IATA’s Director General and CEO.
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1% of industry RPKs in 2018 2Year-on-year change in load factor 3Load Factor Level |
International Passenger Markets
October international passenger demand rose 3.2% compared to October 2018 unchanged from September’s year-over-year performance. With the exception of Latin America, all regions recorded increases, led by Middle East airlines for the first time since June 2018. Capacity climbed 1.6%, and load factor rose 1.3 percentage points to 81.0%.
- Asia-Pacific airlines’ October traffic increased 3.8% compared to the year-ago period, a bit below the 4.0% annual growth recorded in September and well down on 2018 growth largely owing to weaker business confidence in a number of key markets, the impact of the US-China trade war and the recent disruptions in Hong Kong. Capacity rose 2.7% and load factor edged up 0.9 percentage point to 79.6%.
- European carriers saw October demand climb 2.1% year-to-year, down from 3.2% growth in September. On a seasonally-adjusted basis traffic is showing a moderate upward trend despite generally soft economic activity in some of the key markets. Capacity rose 1.3%, and load factor climbed 0.7 percentage point to 85.7%, which was the highest among regions.
- Middle Eastern airlines posted a 5.9% traffic increase in October, which was a sharp increase over the 1.8% growth seen in September and throughout the year. Capacity increased 0.3%, and load factor surged 3.9 percentage points to 73.5%.
- North American carriers had the second highest international demand in October, with traffic up 4.1% compared to October a year ago and largely in-line with a 4.3% annual increase in September. Growth is underpinned by a solid US economy and robust consumer spending. Capacity rose 2.0%, and load factor grew by 1.6 percentage points to 82.1%.
- Latin American airlines experienced a 0.6% demand drop in October compared to the same month last year. This was the weakest performance in nine years and compared to a 0.9% positive growth in September. Deteriorating economic conditions and rising social and political unrest in some of the region’s key economics likely contributed to the results. Capacity fell 2.3% and load factor rose 1.4 percentage points to 81.4%.
- African airlines’ traffic climbed 1.8% in October, the same as in September. Economic slowdown in South Africa may have weighed on the recent moderation in demand growth. Capacity rose 3.6%, however, and load factor dipped 1.3 percentage points to 69.0%.
Domestic Passenger Markets
Demand for domestic travel climbed 3.6% in October compared to October 2018, down from 5.1% annual growth recorded in September owing to softer performance in the US and China, the largest domestic markets. Capacity rose 3.4% and load factor increased 0.2 percentage point to 83.9%.
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October 2019 |
World share1 |
RPK |
ASK |
PLF (%-pt)2 |
PLF (level)3 |
|
Domestic |
36.1% |
3.6% |
3.4% |
0.2% |
83.9% |
|
Australia |
0.9% |
1.8% |
0.5% |
1.1% |
82.8% |
|
Brazil |
1.1% |
3.9% |
0.7% |
2.6% |
84.0% |
|
China P.R. |
9.5% |
5.3% |
6.1% |
-0.6% |
85.4% |
|
India |
1.6% |
3.6% |
2.8% |
0.6% |
83.7% |
|
Japan |
1.1% |
1.5% |
-0.1% |
1.2% |
77.4% |
|
Russian Fed. |
1.5% |
5.6% |
5.0% |
0.5% |
84.7% |
|
US |
14.0% |
4.1% |
3.6% |
0.4% |
85.4% |
- Chinese airlines’ domestic traffic rose 5.3% in October, well down on 8.0% growth recorded in September and the third consecutive month of slowing growth. Modest easing in consumer spending combined with tougher year-ago comparisons contributed to the result.
- Indian airlines saw their domestic traffic rise 3.6%, up from 1.9% in September, supported by the start of the main tourist season. Growth remains well below 2018 levels, however, reflecting the general economic slowdown and the impact of the collapse of Jet Airways.
The Bottom Line
“The airline industry has faced strong headwinds in 2019 but continues to enable the global connectivity that supports world trade and greater understanding among peoples and cultures, things we can definitely use more of, particularly in this time of trade wars and geopolitical tension. Next week, IATA will hold our annual Global Media Days, bringing together journalists and bloggers from around the world. We will present our updated economic forecast, and an in-depth look at our environmental activities among other subjects. I look forward to this opportunity to discuss and debate the key issues and initiatives facing commercial aviation with our colleagues in the media," said de Juniac.
View October passenger results (pdf)
CARGO
The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), decreased by 3.5% in October 2019, compared to the same period in 2018. This marks a weak start to the traditional peak season for air cargo and the twelfth consecutive month of year-on-year declines in freight volumes.Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2.2% year-on-year in October 2019. Capacity growth has now outstripped demand growth for the 18th consecutive month.
Over the past year, air cargo has suffered from the effects of the trade war between the US and China, the deterioration in global trade, and a broad-based slowing in economic growth.
“Air cargo’s peak season is off to a disappointing start, with demand down 3.5% in October. Demand is set to decline in 2019 overall - the weakest annual outcome since the global financial crisis. It has been a very tough year for the air cargo industry,” said Alexandre de Juniac, IATA's Director General and CEO.
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1 % of industry FTKs in 2018 2 Year-on-year change in load factor 3 Load factor level |
Regional Performance
Airlines in Asia-Pacific and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in October 2019, while Latin American and European carriers experienced a more moderate decline. Africa was the only region to record growth in air freight demand compared to October last year.
- Asia-Pacific airlines saw demand for air freight contract by 5.3% in October 2019, compared to the same period in 2018. Capacity increased by 0.6%. The US-China and South Korea-Japan trade wars have negatively affected the region. And the disruption to operations at Hong Kong International Airport – the largest cargo hub in the world – continues to impact activity. However, the thawing of US-China trade relations and robust economic growth in key regional economies are positive developments.
- North American airlines saw demand decrease by 2.4% in October 2019, compared to the same period a year earlier. Capacity increased by 3.1%. The underlying strength of the US economy has seen domestic air cargo outperform international which, as noted above, has also been impacted by the trade tensions with China.
- European airlines posted a 1.5% decrease in freight demand in October 2019 compared to the same period a year earlier – a significant improvement over the 3.5% decrease in September. Better than expected economic activity in Q3 in several of the region’s large economies helped support demand. Capacity increased by 2.8% year-on-year.
- Middle Eastern airlines’ freight volumes decreased 6.0% in October 2019 compared to the year-ago period. This was the sharpest drop in freight demand of any region for the month. Capacity increased by 0.9%. Against a backdrop of operational and geopolitical challenges facing some of the region’s key airlines, seasonally adjusted freight volumes in the region have resumed a modest upwards trend which is a positive development for the region’s carriers.
- Latin American airlines experienced a decrease in freight demand in October 2019 of 2.6% compared to the same period last year. Various social and economic headwinds in the region’s key economies have impacted the region’s air cargo performance. Capacity increased by 2.3% year-on-year.
- African carriers posted the fastest growth of any region in October 2019, with an increase in demand of 12.6% compared to the same period a year earlier. Strong trade and investment links with Asia contributed to the positive performance. Freight volumes on key Africa-Asia routes were up 23% annually in September (latest available data). Capacity grew 13.9% year-on-year.
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