IATA – global air passenger demand up 4.5% in May 2012 compared to May 2011
IATA says that globally the number of air passenger kilometres rose by 4.5% in May, compared to May 2011. They regard this as not high enough, because it is not much above the level this April. Globally air freight was down – 1.9% in May. IATA says “Traffic growth for European carriers basically stopped at the end of 2011.” Also that “Domestic markets grew at slightly less than half the rate of international markets”. IATA says the airline industry is fragile; that lower oil prices have helped them recently but that fears of deterioration in the European economy are hitting their industry. Business and consumer confidence are falling, causing slowing demand and softer load factors, which does not bode well for industry’s profitability. Airlines are expected to return only a $3 billion profit in 2012 on $631 billion in revenues (=0.48%).
Demand Growth Slows
2.7.2012 (IATA press release)
Geneva – The International Air Transport Association (IATA) announced global traffic results for May showing a general downward trend in line with deteriorating global economic conditions.
While passenger demand was 4.5% ahead of levels in May 2011, growth was virtually flat compared to April. Capacity increased by 4.0% and load factors stood at 77.6%, below the historically high levels recorded in April.
May freight demand was 1.9% below previous year levels. Compared to April, the freight market contracted by 0.4%. Freight markets hit a low during the fourth quarter of 2011. Since then, they have basically moved sideways with just a 1.5% improvement on that level by May. The freight load factor stood at 45.3%, unchanged from the previous month but 1.2 percentage points below May 2011 levels.
“The airline industry is fragile. Relief in oil prices provides some good news. Unfortunately, the softness in oil markets comes on the back of fears of deterioration in the European economy. Business and consumer confidence are falling. And we are seeing the first signs of that in slowing demand and softer load factors. This does not bode well for industry profitability. Airlines are expected to return a $3 billion profit in 2012 on $631 billion in revenues. That’s a razor-thin 0.5% margin,” said Tony Tyler, IATA’s Director General and CEO.
|May 2012 vs. May 2011||RPK Growth||ASK Growth||PLF||FTK Growth||AFTK Growth|
|YTD 2012 vs. YTD 2011||RPK Growth||ASK Growth||PLF||FTK Growth||AFTK Growth|
International Passenger Markets
International International passenger demand was up 5.6% compared to May 2011. That is well below the 7.1% growth recorded in April. All regions, except the Middle East, saw growth in passenger demand slow in May compared to April. A 4.1% capacity expansion, however, helped improve load factors from 75.9% in May 2011 to 77.0% for the current month.
- European carriers posted 4.1% growth on international services when compared to the previous May. This is significantly below the 5.7% year-on-year growth recorded for April. The region’s load factor of 78.5% was 1.5 percentage points ahead of the global average. Traffic growth for European carriers basically stopped at the end of 2011. Since the beginning of 2012, the growth trend has been basically flat, in line with the economic pessimism throughout the continent.
- North American airlines experienced a 1.5% increase on international demand in May compared to the previous year. This is below but relatively unchanged from the 1.6% year-on-year growth recorded in April. Load factors for the region’s carriers averaged 82.1% for the month, the highest among the regions. This reflects the tight capacity management conditions which are supporting the recent upward revision of profitability prospects to $1.4 billion (slightly ahead of the $1.3 billion that the region’s carriers made in 2011).
- Asia-Pacific carriers showed a 5.5% expansion in demand over the previous year period. This was ahead of capacity expansion of 3.1%, pushing load factors to 75.4%. In April, the region’s carriers recorded 8.6% growth—heavily skewed from the impact of the Japanese earthquake and tsunami in 2011. Compared to April, demand actually declined 0.8%, while load factors slipped 0.4 percentage points.
- Middle East carriers showed the strongest growth at 15.8%, outstripping capacity expansion of 11.9%. Load factors were the second-weakest among regions at 74.0%. This is, however, a 0.4% point improvement compared to April. The Middle East carriers were the only ones to report aggregate accelerated demand growth compared to April, when the region’s airlines reported 15.2% growth.
- Latin American airlines recorded solid growth of 7.4%. This was ahead of a 5.5% capacity expansion and left load factors at 77.1%, 1.4% points ahead of May 2011 levels.
- African airlines saw demand growth of 9.7% compared to May 2011, below a capacity expansion of 11.8%. Load factors stood at 62.9%.
Domestic Passenger Markets
Domestic markets grew at slightly less than half the rate of international markets, just 2.7%. This was significantly below the 4.1% year-on-year growth recorded in April. Load factors of 78.8% were 0.8% points below the 79.6% reported for May 2011.
- Japan experienced the strongest traffic growth, up 14.8% year-on-year. If we strip out the impact of the Japanese earthquake and tsunami, IATA estimates that Japanese domestic traffic still would have improved year-on-year by about 4%. Load factors of 58.4% were the lowest among major domestic markets.
- China’s domestic demand has slowed to growth rates last seen in early 2011. This reflects a slowdown across the Chinese economy. Traffic rose 4.4% against an 8.3% increase in capacity, pushing load factors down to 78.6%. Compared to April, domestic demand was virtually unchanged.
- US domestic demand slipped 0.1% in May while capacity rose by 0.3%. Load factors dipped slightly to 84.3%, still the highest among all the domestic markets.
- Brazil experienced the strongest growth after Japan, with traffic up 7.2% on a 6.7% rise in capacity. Load factors rose to 65%. However growth softened compared to April, declining 3.1%.
- Indian domestic traffic rose just 0.1% year-over-year, but fell 2.7% compared to April. Load factors stood at 76.8%.
Air Freight (Domestic and International)
Air freight markets stood at 1.9% below previous year levels in May. Compared to April, there was a 0.4% contraction. Taking a broader perspective, air freight has improved by a small 1.5% since hitting bottom in 2011. But this growth has been narrowly focused on the Middle East carriers.
- European airlines experienced the steepest decline in freight traffic, posting a 5.7% decline compared to a year ago on a 1% rise in capacity. North American airlines had a 1.9% drop in demand while capacity was trimmed by 1.6%. Asia-Pacific carriers saw a 4.1% decline in demand in May compared to the previous year, while capacity dipped just 1.7%.
- Latin American airlines’ demand rose 0.2%, while capacity climbed 0.5%.
- Middle Eastern carriers posted a 12.4% increase in demand, which exceeded an 11.7% rise in capacity. Half of this year’s growth in cargo markets has been captured by the Middle East carriers.
- African carriers’ results were not available but will return next month.
The Bottom Line
Evidence of the importance of aviation abounds:
- The Rio+20 meeting brought together over 22,000 delegates to discuss the future of the planet.
- About 15,000 athletes, over 20,000 media and many more spectators will converge on London to watch the Olympics.
- And some 600 million people are expected to fly over the months of July and August as families and friends reunite, businesses find new opportunities and travelers experience new lands.
“Whether bringing people together or moving cargo around the globe, aviation is vital to modern life. The G-20 leaders recognized the critical role of aviation which is the backbone of travel and tourism that is a vehicle for job creation, economic growth and development. Now we need governments to move from recognition to action with tax policies that don’t kill growth, regulation that enables growth and infrastructure to accommodate growth,” said Tyler.
- Domestic Markets: Domestic RPKs account for about 37% of the total market. It is most important for North American airlines as it is about 67% of their operations. In Latin America, domestic travel accounts for 47% of operations, primarily owing to the large Brazilian market. For Asia-Pacific carriers, the large markets in India, China and Japan mean that domestic travel accounts for 42% of the region’s operations. It is less important for Europe and most of Africa where domestic travel represents just 11% and 12% of operations respectively. And it is negligible for Middle Eastern carriers for whom domestic travel represents just 6% of operations.
- Explanation of measurement terms:
- RPK: Revenue Passenger Kilometers measures actual passenger traffic
- ASK: Available Seat Kilometers measures available passenger capacity
- PLF: Passenger Load Factor is % of ASKs used.
- FTK: Freight Tonne Kilometers measures actual freight traffic
- AFTK: Available Freight Tonne Kilometers measures available total freight capacity
- FLF: Freight Load Factor is % of AFTKs used
- IATA statistics cover international and domestic scheduled air traffic for IATA member and non-member airlines.
- All figures are provisional and represent total reporting at time of publication plus estimates for missing data. Historic figures may be revised.
- Total passenger traffic market shares by region of carriers in terms of RPK are: Europe 28.9%, Asia-Pacific 28.2%, North America 27.7%, Middle East 7.8%, Latin America 5.2%, Africa 2.2%.
- Total freight traffic market shares by region of carriers in terms of FTK are: Asia-Pacific 39.0%, Europe 21.9%, North America 23.3%, Middle East 11.4%, Latin America 3.0%, Africa 1.3%.
- International passenger traffic market shares by region in terms of RPK are: Europe 41.5%, Asia-Pacific 25.5%, North America 15.2%, Middle East 10.5%, Latin America 4.5%, Africa 2.9%.
- International freight traffic market shares by region in terms of FTK are: Asia-Pacific 42.1%, Europe 25.6%, North America 16.7%, Middle East 11.4%, Latin America 3.1%, Africa 1.2%.
- International passenger traffic market shares by region in terms of RPK are: Europe 40.5%, Asia-Pacific 26.1%, North America 15.7%, Middle East 10.5%, Latin America 4.0%, Africa 3.2%
- International freight traffic market shares by region in terms of FTK are: Asia-Pacific 44.6%, Europe 25.1%, North America 16.0%, Middle East 10.1%, Latin America 2.9%, Africa 1.3%
By comparison, last for last May they were saying:
Date: 30 June 2011
Demand Grows in May – Good News on Volumes, But Risks Remain
Geneva – The International Air Transport Association (IATA) announced traffic results for May which showed a 6.8% increase in passenger traffic over May 2010. This is 4% higher than the beginning of the year. Freight traffic showed a drop of 4% against the post-recession peak of the re-stocking cycle in May 2010. However, recent months show a renewed upward trend with freight volumes 2% higher than the start of the year.
|May 2011 vs. May 2010||RPK Growth||ASK Growth||PLF||FTK Growth||AFTK Growth|
|YTD 2011 vs. YTD 2010||RPK Growth||ASK Growth||PLF||FTK Growth||AFTK Growth|
“We saw positive developments for the air transport volumes in May. International passenger load factors rebounded by 0.8 percentage points to 75.8%. Freight volumes improved by 1.2% over April and passenger volumes were up by 1.8%. These will help to alleviate some of the pressure on profits from continued high fuel prices,” said Giovanni Bisignani, IATA’s Director General and CEO.
“But there are risks associated with political unrest in the Middle East and the European currency crisis. We still expect the industry to make $4 billion this year. That is a pathetic 0.7% margin and another shock could alter the industry’s fortunes dramatically. It’s another tough year for a very fragile industry,” said Bisignani.
International Passenger Markets by Region
- African airlines’ international traffic increased 1.1% over the previous year. Travel markets to the region had been depressed by the impact of political unrest in Egypt and Tunisia. Flights to these two destinations are still about 20% down. However a significant 2.2 percentage point improvement in the load factor for the month does show initial signs of improvement.
- Asia-Pacific carriers recorded an expansion of 4.7%, considerably below the global average of 8.0%. This is due to continuing weakness in the post-earthquake/tsunami Japanese market. Compared to May 2010, capacity expanded 5.0% and the load factor fell slightly to 73.4%.
- European carriers’ traffic expanded by 10.9%, boosted by increased northern European economic activity and a weaker Euro encouraging trade and inbound travel. Capacity expanded by 10.6%, second only to Latin America, and the load factor strengthened to 77.7%.
- Latin American carriers saw the fastest international growth, up 21.3% compared to May 2010, and the fastest capacity expansion (15.2%). This is a consequence of strong economic growth and increased travel and trade flows to North America and across the Pacific. The load factor is just above the industry average at 76.0%.
- Middle East carriers grew international traffic by 7.8% over May 2010, slightly below a 9.6% capacity expansion that saw load factors slip to 70.8%. While political unrest continues to have a dramatic impact on several of the region’s smaller markets, the overall impact on the region’s carriers is very limited.
- North American carriers have cut capacity for two consecutive months (-0.4% in April and -0.5% in May). Year-on-year, traffic is up 4.5% and capacity increased by 5.5%. This cautious approach to capacity expansion resulted in the highest load factor (81.8%) among the major regions.
Domestic Passenger Markets by Region
- Japanese domestic demand was 29.9% below May 2010 while capacity has been adjusted downwards by 20.8%. Total volumes in May were 4.4% higher than in April, showing the initial signs of recovery from the earthquake and tsunami. But the low 54.7% load factor indicates the continuing mismatch between supply and demand.
- Brazil remains volatile but demand is up 21.6% on May 2010 while capacity was 7.2% higher. The volatility of the market is evident in a 65.7% load factor even with the demand outstripping capacity by such a wide margin.
- In China, demand was 10.4% higher than the previous May. A capacity expansion of just 3.3% resulted in load factors of 81.5%. While this is still robust growth, it is a major ramping down from the 14.6% recorded in 2010— reflecting tighter economic policies.
- India domestic demand was 13.8% above previous-year levels against a capacity expansion 19.9%. The load factor of 78.3% is consistent with the global average of 79.4%.
- The mature United States domestic demand grew by 4.0% compared to the previous May. Against a 1.5% increase in capacity, load factors were pushed to 84.6%–the highest among domestic markets surveyed.
Freight (Domestic + International)
Air freight markets showed a 4.0% decline in May. This is skewed as a result of the May 2010 peak for of the post-recession restocking cycle. Since the beginning of the year, freight volumes have increased by a modest 2.0%. This is lower than the 5.5% IATA forecast for 2011. While the continued expansion of world trade at around 6% annually could lend support to accelerated freight growth in the second half of 2011, the performance so far this year has been lower than expected. Carriers in all regions except Latin America (up 1.5%) and the Middle East (+8.1%) saw air freight declines compared to May 2010. The largest fall was forAsia-Pacific carriers with a 9.2% drop showing the impact of disrupted supply chains in Japan and tighter economic policies in China. Declines by African carriers (down 7.8%) reflected the disruption in Egypt and Tunisia. European and North American carriers had modest falls of 2.2% and 1.4% respectively.
View May 2011 traffic results