Emerging markets drive international airline traffic in April

While economic developments in Europe and the US certainly bear watching, most indicators continue to signal further expansion in air travel.
Tony Tyler
Director General & CEO

INTERNATIONAL. Global airline passenger traffic climbed by +3.2% year-on-year in April, the International Air Transport Association (IATA) has revealed.

The timing of the Easter holiday (which occurred in March 2013 and in April 2012) was largely responsible for the apparent decline from March performance (when year-on-year demand showed a +6.2% increase), IATA noted. The seasonally adjusted rate for April showed demand up almost +5%, which is in line with the long term historical trend.

IATA Director General and CEO Tony Tyler said: “Passenger demand continued to grow in April, extending the positive trend that has been developing since late 2012. The increase, however, is concentrated in emerging markets. Airlines in Europe and North America reported a modest expansion compared to the strong growth seen in Africa, the Middle East and Asia. While economic developments in Europe and the US certainly bear watching, most indicators continue to signal further expansion in air travel.”

Global capacity rose +4.4% on the previous April which was slightly ahead of demand. This pushed the industry load factor downwards by 0.9 percentage points to 78.1%. Adjusted for the impact of seasonality, the load factor remained near record highs of 80%.

International passenger markets
April international passenger demand was up +.0% compared to the year-ago period. Capacity rose +4.3% versus April 2012 and load factors dipped by 1.0 percentage point to 77.8%.

Asia Pacific carriers recorded an increase of +2.4% compared to April 2012. This compared to a +5.7% rise in March year-over-year. In addition to seasonal factors, this reflects the softening in regional economic indicators, IATA said. China’s business confidence slipped in April to levels indicating stagnation in the manufacturing sector, and growth in Asian trade volumes has flattened after a pick-up toward the end of 2012. Capacity rose +3.7% and load factor slipped one percentage point to 76.9%.

European carriers recorded +2.0% growth compared to April 2012, down on March growth of +4.5% – largely owing to the downward impact of the timing of the Easter holiday. Although capacity growth of +2.9% pushed load factor down 0.7 percentage points to 79.4% compared to a year ago, the monthly trend showed improvement.

North American airlines’ international traffic shrank -0.5% in April versus the same month last year, the only region to experience a contraction in traffic growth. Capacity rose +1.3% and load factor fell 1.4 percentage points to 79.5%, still the highest for any region. Although the underlying international growth trend for North American carriers had been showing improvement since late last year, more recently it has returned to levels in line with those of the fourth quarter of 2012. The impact of government spending cuts related to the federal budget sequestration are yet to be fully seen, but the initial impact on business confidence has been negative with a significant slip in the US Manufacturing Purchasing Manager’s Index (PMI) in April, IATA warned.

Middle East carriers saw year-on-year demand expand by +10.9%–by far the strongest among all the regions. Capacity rose +12.9%, however, pushing down load factor 1.4 percentage points to 76.8%.

Demand for air travel has benefitted from continued expansion in trade volumes in the Middle East and Africa since late 2011, with regional airlines embarking on network and capacity expansion to take advantage of that growth.

Latin American airlines posted year-on-year demand growth of +4.6% but capacity rose +7.9% and load factor dropped 2.4 percentage points to 76%. However, the monthly trend shows an improvement in load factor.

African airlines’ traffic climbed +4.7% compared to April 2012, second best among the regions, while capacity rose +3.3%, causing load factor to rise 0.9 percentage points to 67.8%. Africa was the only region to experience a rise in load factor compared to 2012. As with their counterparts in the Middle East, African airlines have seen solid growth in air travel as a result of a sustained increase in trade and rapid economic expansion in some local economies.

Domestic passenger markets
Domestic markets climbed +3.5% in April compared to a year-ago, driven primarily by strong demand in China, as other markets experienced declines with the exception of Australia, which rose +3.8%. Total domestic capacity was up +4.7% compared to April 2012 and load factor fell 0.9 percentage points to 78.6%.

US traffic rose +1.1% in April compared to the year-ago period, but was down on the March growth of +3.1%. Results could have been negatively impacted by the timing of the Easter holiday. However, based on month-to-month trend, which showed a -0.5% contraction, the earlier acceleration is starting to weaken, reflecting falls in business confidence, IATA said. Capacity rose +2.4%, pushing load factor down one percentage point to 82.6% but still the highest for any region.

China’s domestic traffic jumped +10.8% compared to April 2012, although this was less than the +16.6% growth recorded in March. This decline likely reflects the reversal in the previous upswing of Chinese business confidence indicators, suggesting sluggishness in the service and manufacturing sectors. Capacity rose +12.7% and load factor slipped to 80.8%.

Japan’s domestic market contracted -1.1% in April over the year ago period. Capacity rose +1.8%. Load factor was down 1.7 percentage points to 55.3%, by far the lowest for any region. Air travel is yet to reflect improvements in economic indicators, which show business confidence and exports on the rise.

Brazil saw traffic fall -3.4%, with airlines cutting capacity to offset downward pressure on profitability from slower than expected economic growth by. Capacity declined -4.8% and load factor improved one percentage point to 71.3%.

Indian domestic traffic slipped -0.3% in April compared to a year ago. This followed a sharp rise in March traffic attributable to fare discounting. April capacity fell -0.2% and load factor was unchanged at 75.5%.

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