How October global air service fared with economic weakness

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Written by Linda Hohnholz

GENEVA – The economy in some regions around the globe was bleak. How did this affect airline passenger numbers around the world?

GENEVA – The economy in some regions around the globe was bleak. How did this affect airline passenger numbers around the world? The International Air Transport Association (IATA) presented global passenger traffic results in a report for the month of October 2014.

The month showed a strengthening in demand growth compared to September 2014 and to the year-ago period. Total revenue passenger kilometers (RPKs) rose 5.7% over October 2013, slightly ahead of the 5.2% year-on-year rise recorded in September 2014. October capacity (available seat kilometers or ASKs) increased by 5.5%, causing load factor to rise 0.1 percentage points to 79.1%.

“Against a backdrop of economic weakness in some regions, October traffic results show demand for connectivity remains strong on a global basis,” said Tony Tyler, IATA’s Director General and CEO.

“With 2014 drawing to a close, the outlook for air travel remains largely positive. Improvements in economies in Asia-Pacific and the US are offsetting weakness in the Eurozone and China. The fall in oil prices, if sustained, could provide a much-needed operating cushion. But there are risks which must also be accounted for—including the proliferation of political instability,” said Tyler.


Oct 2014
vs. Oct 2013


RPK Growth


ASK Growth


PLF



International

5.5%

6.4%

78.0%


Domestic

5.8%

4.0%

81.1%


Total
Market

5.7%

5.5%

79.1%

 


YTD 2014
vs. YTD  2013


RPK Growth


ASK Growth


PLF



International

6.2%

6.4%

79.7%


Domestic

5.2%

4.2%

81.0%


Total
Market

5.8%

5.6%

80.2%

International Passenger Markets

October international passenger demand rose 5.5% compared to the same month last year, with airlines in all regions except Africa recording growth. Capacity climbed 6.4% and load factor dipped 0.6 percentage points to 78.0%.

• European airlines saw demand increase by 5.8% in October versus October 2013, the strongest growth among the three largest regions. Although there has been some slowdown in the Eurozone economy, travel on low cost carriers has remained robust and is helping sustain current results. Capacity rose 5.0% and load factor climbed 0.6 percentage points to 81.9%, highest among regions.

• Asia-Pacific carriers’ traffic rose 5.5% compared to the year-ago period, reflecting stronger regional trade activity which encourages business travel. The economic slowdown in China has yet to have any impact on regional trade activity and related business travel. Capacity rose 7.4% and load factor dropped 1.4 percentage points to 74.9%.

• North American airlines experienced a 1.8% rise in traffic compared to October a year ago. While a slowdown compared to September year-over-year growth, underlying trends in business activity are positive and growth in trade volumes has accelerated. Capacity rose 3.2%, which caused load factor to dip 1.1 percentage points to 80.3%.

• Middle East carriers’ demand climbed 10.3% in October, the largest increase for any region, reflecting strong regional economies with rising export activity that supports regional trade and related international business travel. Capacity climbed 13.5%, causing load factor to fall 2.1 percentage points to 73.5%.

• Latin American airlines saw traffic climb 6.5% compared to October 2013, second best among regions. Capacity rose 6.0% and load factor rose 0.5 percentage points to 80.5%. The weak growth in the Brazilian economy may be deteriorating further but regional trade volumes have been improving.

• African airlines’ traffic contracted 1.6% in October, while ASKs slipped 0.1%, resulting in a 1.0 percentage point drop in load factor to 66.8%, the lowest for any region. The weakness reflects adverse economic developments in some parts of the continent. However, the improving outlook for South Africa could ease some of the downward pressure on the continent’s carriers. Additionally, the effect of any Ebola-related traffic downturn is mostly restricted to Guinea, Liberia and Sierra Leone, markets that comprise a very small proportion of overall African traffic.

Domestic Passenger Markets

Domestic travel demand rose 5.8% in October compared to October 2013, with the strongest growth occurring in China and India. Total domestic capacity climbed 4.0%, and load factor rose 1.4 percentage points to 81.1%.


Oct 2014
vs. Oct 2013



RPK              


ASK


PLF


Australia

3.4%

-1.2%

82.7%


Brazil

8.0%

3.9%

81.1%


China P.R

10.0%

10.1%

80.8%


India

16.3%

3.4%

77.4%


Japan

1.3%

-2.5%

70.0%


Russian
Federation

6.1%

2.4%

75.0%


US

3.8%

2.0%

84.3%


Domestic

5.8%

4.0%

81.1%

• China’s domestic demand rose 10% in October compared to a year ago, a solid result in view of indicators suggesting that the economy is starting to slow.

• Indian domestic traffic climbed 16.3%. Although this was a considerable slowdown compared to September year-over-year growth of 26.4%, it was still a strong result and reflects market stimulation by local carriers.

The Bottom Line

“This weekend marks International Civil Aviation Day. And next month will begin the second century of commercial aviation. These are fitting moments to pause and reflect upon the reliance of the global economy on connectivity. Even more important is the challenge to prepare for the future by ensuring that the industry has a smart regulatory environment, cost-efficient infrastructure and a reasonable tax obligation,” said Tyler.

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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