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“The uncertainty that we see in the global economic situation is being reflected in air transport’s performance.“ |
Tony Tyler Director General & CEO IATA |
INTERNATIONAL. Global airline traffic climbed by +6.2% year-on-year in June, according to the International Air Transport Association (IATA). But the association warned of a slowdown in demand, in line with weak business and consumer confidence.
Global airline capacity grew by +4.5% in the month, leaving load factors at 81%. IATA noted that the trend from February through June trend shows +2% annualized growth, a major slowdown from the +8% annualized growth rate experienced from mid-2011 through to January 2012.
IATA Director General and CEO Tony Tyler said: “The uncertainty that we see in the global economic situation is being reflected in air transport’s performance. Although there are some pockets of solid performance, it is difficult to detect a strong trend-positive or negative-at the global level. Passenger markets have been growing more slowly since the beginning of the year and freight markets gains have been mostly very weak. The net effect is a demand limbo as consumers and businesses hedge their spending while awaiting clarity on the European economic front.”
International passenger traffic
June demand in international passenger markets was up +7.4% on the previous year, IATA said, but growth has slowed since last year, it added. For example, from May to June 2012 demand was up just +0.2%. When looked at over the second quarter of 2012, the trend in international air travel has been an annualized growth rate of just over +2%.
European airlines experienced strong growth in June (+7.3%), well ahead of the May result (+4.3%). Given the continuing economic uncertainty centred on Europe, the strong June performance is more likely a result of volatility in weak market conditions, IATA claimed. The previous few months had seen the growth trend flatten out, after a solid +6% annualized growth rate from mid-2011 through the first quarter of 2012. Capacity was up 4.9% and load factors stood at 82.5%.
North American airlines saw +1.6% growth in demand while capacity was cut by -0.3% compared to the previous June. This pushed the load factor to 86.9% which was the highest among the regions. Compared to May there was basically no growth with the region’s airlines reporting a -0.1% decline in demand.
Asia Pacific carriers reported a +6.0% growth in demand which was more than double the +2.9% expansion in capacity for June, when compared to the same month in 2011. The load factor for the region’s carriers stood at 79.5%. Month-to-month, the demand in the region was basically flat at -0.1%. The growth trend for the region is similar to that of the overall market. From mid-2011 to the start of 2012, Asia Pacific carriers experienced a +9.5% annualized growth in demand. That has slowed to +2% for the February to June period.
Middle East carriers were the strongest performers with demand growth of +18.2% outstripping a capacity expansion of +13.4%. Load factors stood at 78.6%. In contrast to the overall market, the growth trend in this region has been robust throughout 2012, gaining a further +1.9% in June compared to May.
Latin American airlines also performed well in June, recording an +11.2% gain in demand compared to the previous year. Demand growth slightly outpaced a capacity expansion of +10.7%, but load factors were among the weakest at 77.4%.
African carriers showed growth of +10.1%, slightly behind a capacity expansion of +10.6%. At 65.0%, the region’s load factor was the weakest.
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Domestic passenger markets
All markets, except India, showed an expansion in demand in June compared to the previous year. Similar to the developments in international travel, however, economic slowdowns in various countries are keeping the growth trend soft throughout 2012, said IATA. The first six months of 2012 have seen overall domestic air travel growth trend slow to a +2% annualized rate, after increasing at more than +6% annualized growth over the second half of 2011. Overall, domestic demand grew by +4.1%, slightly ahead of capacity which grew by +3.6%. The domestic load factor stood at 81.1%.
India’s domestic travel fell by -0.7% in June even as capacity expanded by +4.5%. The load factor was 74.2%. This is the second month of weak year-on-year growth, and the trend in growth continues to be flat since the start of 2012.
Japan’s domestic market continues to look flat. The post-earthquake and tsunami rebound lost steam towards the end of 2011, IATA noted. Demand was up +10.4% compared to last June, but the overall market remains about -8% below pre-earthquake and tsunami levels. Japanese domestic load factors were the weakest at 58.2%.
Brazil recorded domestic demand growth of +13.8%, double the capacity expansion of +6.5% and a load factor of 71.1%. The trend in traffic growth since the start of the year has weakened, however, with domestic demand in June more than -1% lower compared to January.
Chinese domestic air travel grew +7.8% compared to the previous June and was below the capacity expansion of +8.7%. This in an improvement on recent months, when year-on-year growth rates fell to levels not seen since the start of 2011. Weakness in the trend in domestic travel has been present throughout 2012, with little increase since the start of the year, consistent with the slowdown seen in the Chinese economy, IATA said. The load factor still remained strong at 81.3%.
US domestic demand was up +0.8% compared to the previous June. With capacity growth held to +0.1%, US carriers reported a load factor of 86.6%, the highest among the major domestic markets.
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