Geneva
- The International Air Transport Association (IATA) announced global traffic
results for April showing that total passenger demand rose 6.1% while freight
demand was 4.2% down on April 2011.
Despite
continuing economic weakness in some parts of the world, demand for air travel
continues to grow. The 6.1% overall growth recorded for April is above the
20-year trend. Strong demand for air travel with limited capacity expansion
pushed load factors to 79.3% which is a record high for an April load factor.
The
4.2% contraction in air freight markets compared to April 2011 is somewhat
misleading. Air freight markets slumped sharply in the first half of 2011 and
bottomed out towards the end of the year. Various distortions and
month-to-month volatility have marked the industry performance since the
beginning of 2012. However, April cargo levels stood at about 2% higher than in
November 2011. About 80% of this improvement has been captured by Middle
Eastern airlines. Air freight for the Asia-Pacific, European and North American
carriers has continued to show weakness.
“It’s
a volatile and risky world. Airlines are being cautious managing through the
uncertainty. Overall passenger demand was up 6.1% in April and capacity
increases were held back to 3.8%. There are signs that cargo has bottomed out.
Amid the many distortions that have marked the first four months of the year,
it is possible to identify the start of a growth trend in cargo for some parts
of the world. But economic uncertainty in Europe makes it very difficult to be
optimistic in the near to medium-term,” said Tony Tyler, IATA’s Director
General and CEO.
Apr 2012 vs. Apr 2011
|
RPK Growth
|
ASK Growth
|
PLF
|
FTK Growth
|
AFTK Growth
|
International
|
7.4%
|
4.3%
|
79.1
|
-4.5%
|
0.2%
|
Domestic
|
3.9%
|
2.8%
|
79.7
|
-2.7%
|
-2.0%
|
Total Market
|
6.1%
|
3.8%
|
79.3
|
-4.2%
|
-0.3%
|
YTD 2012 vs. YTD 2011
|
RPK Growth
|
ASK Growth
|
PLF
|
FTK Growth
|
AFTK Growth
|
International
|
8.1%
|
5.2%
|
77.1
|
-2.5%
|
1.8%
|
Domestic
|
5.5%
|
4.4%
|
78.1
|
-0.9%
|
-1.4%
|
Total Market
|
7.1%
|
4.9%
|
77.5
|
-2.3%
|
1.1%
|
International Passenger
Markets
International
air travel rose 7.4% in April compared to the year-ago period, outstripping a
capacity expansion of 4.3%. April load factors stood at 79.1%, up 2.3
percentage points from April 2011.
European airlines recorded
passenger demand growth of 5.9%. This is below the 7.4% global average and is
significantly lower than the 8.7% growth recorded in March. Demand was, however,
stronger than the 3.4% capacity expansion which pushed load factors to 80.7%.
While this is a relatively strong performance compared to previous-year levels,
since the beginning of the year, there has been a declining trend. April, for
example, saw traffic contract by 0.3% compared to March—despite the Easter
holiday period being in mid-April.
Asia-Pacific carriers also
experienced strong growth of 9.3% against a capacity expansion of 4.6%. Load
factors stood at 78.1%. The strong performance is exaggerated by the comparison
to April 2011 when Asia-Pacific markets were particularly weak in the aftermath
of the Japanese earthquake and tsunami. Removing the impact of the event, the
region’s growth is estimated to be about 6%.
North
American airlines saw passenger
demand expand by 1.6% in April compared to the previous year. This is the
weakest demand growth among all regions and represents a weakening from the
5.3% year-on-year growth recorded in March. However, the trend in North
American travel is still positive since the end of 2011, as US economic
conditions and particularly consumer confidence has improved. North American
carriers were also the only region to cut capacity (by an almost equal 1.5%).
This allowed the region’s carriers to post the strongest load factors at 80.8%.
Middle
East airlines’ traffic growth
has started to pick up pace again, recording a 16.0% gain in passenger demand
for April, after having softened in the second half of 2011. Although this is a
fall from the 20.9% growth recorded in March, the March result was distorted by
the impacts of the Arab Spring in 2011. Furthermore, demand did grow faster
than the 12.7% capacity expansion in April and load factors remained high at
78.3%.
Latin
American carriers experienced a
9.0% expansion in international demand in April compared to the same month in
2011. Despite some potential for economic slowdown, growth has been solid
enough in the region’s economies to sustain strong demand for passenger travel.
This outpaced the capacity expansion of 5.3% and bucked expectations of a
slowdown in the region due to weakening economic conditions. Load factors stood
at 78.6%.
African airlines reported a 7.0%
increase in demand. It was the only region where capacity expansion (8.5%)
outpaced demand growth. Load factors were the weakest at 65.9%.
Domestic Passenger Markets
Domestic Passenger Markets
Domestic
markets grew at about half the rate of international markets, just 3.9%. Load
factors of 79.7% were slightly higher than on international routes (79.1%).
· Japan experienced the strongest
traffic growth, up 27.8% year-on-year. This, however, reflects the devastating
impact on year-ago traffic of the natural disasters of March 2011. While the
market has significantly recovered, domestic traffic levels remain 8% below
pre-earthquake and tsunami levels. Load factors of 57% are the lowest among
major domestic markets.
·
China’s domestic demand
reflected the slowdown seen more broadly across the Chinese economy. The 6.3%
growth recorded in April was the lowest recorded since early 2011 and well
behind the 10.1% growth reported in March. The result reflects the slowdown
seen in the economy more widely. Load factors of 82.2%,
nonetheless, were high.
·
US domestic markets grew by
1.0% in April while capacity contracted by 0.7%. Load factors were the
highest at 83.6%.
·
Passenger
demand in Brazil grew by just 2.0%, below the 4.5% capacity
expansion. Load factors stood at 70.2%.
·
India traffic rose by 8.6%
year-over-year, ahead of the 1.7% capacity expansion. Load
factors stood at 75.3%.
Air
Freight (Domestic and International)
· Air freight markets, while
weak, are now showing some signs of expansion after bottoming out toward the
end of 2011.
· Asia-Pacific carriers
saw a 7.3% decline in demand in April, well ahead of capacity cuts of 4.1%.
This reflects weakening exports from China. European airlines saw
a 4.9% fall in cargo traffic compared to the year before, despite having cut
capacity by 0.2%. North American carriers showed a 6.4% drop
in demand with a 2.9% cut in capacity. Latin American carriers
recorded a 3.6% fall in demand even though capacity expanded by 8.8% compared
to April 2011.
· Middle Eastern carriers were the bright spot in cargo
with a 14.5% increase in demand. But this was behind a 15.1% increase in
capacity. African carriers showed a 6.1% increase in demand,
behind a 9.0% increase in capacity.
The
Bottom Line
“The
growth in passenger markets is encouraging. But it comes against an environment
of continuing high oil prices and growing economic uncertainty. So translating
the stronger demand into profits will be difficult,” said Tyler.
With
the exception of Africa, all markets saw capacity expansion at levels below the
expansion in demand. “In the face of economic uncertainty, many airline
managements will be going back to first principles—careful capacity management,
cost control and conserving cash. This will be the order of the day until some
clarity comes to the global economic outlook. Of course the uncertainty impacts
the whole value chain. We are all in this together. Airlines will be
particularly looking to their industry partners to share the imperative on cost
control,” said Tyler.
IATA
will update its industry financial outlook on 11 June 2012 at the Association’s
Annual General Meeting to be held in Beijing, China from 10-12 June 2012.