Passenger traffic shows continued strength
The International Air Transport Association (IATA) announced global passenger traffic results for March showing strong demand growth led by emerging markets, with all regions showing gains. Total traffic rose 5.9 per cent, compared to March 2012.
Part of the rise may be attributable to traffic related to the Easter holiday, which occurred in March this year versus April 2012. But the seasonally adjusted trend continues to show strong growth, with demand expanding at an eight per cent annualised rate in the six months since October 2012. Capacity rose 3.5 per cent compared to the year-ago period, pushing up load factor 1.8 percentage points to 80.3 per cent.
"Strong demand for air travel is consistent with improving business conditions. Performance, however, has been uneven. Mature markets are seeing relatively little growth while emerging markets continue to show a robust expansion. Although oil prices have softened in recent weeks, they remain high against historical averages. In view of this, airlines are responding with a very cautious approach to capacity management," said Tony Tyler, IATA director general and CEO.
International Passenger Markets
March international passenger demand rose 6.0 per cent compared to the year-ago period, with capacity up 3.5 per cent, pushing up load factor 1.8 percentage points to 79.9 per cent. Compared to February, traffic rose 0.4 per cent. The strongest growth occurred in the emerging markets of Latin America and the Middle East.
- European carriers recorded 3.7 per cent growth on international services compared to March 2012. However, the trend for international travel on European airlines has been largely flat since October 2012, reflecting persisting weakness in the eurozone economy and recent downward revisions to growth expectations for 2013. Nearly flat capacity growth of 0.4 per cent helped propel load factor 2.6 percentage points to 81.2 per cent, second highest among regions.
- North American airlines' international traffic rose 2.4 per cent year-on-year in March (after rising just 0.3 per cent in February). This was the slowest rise among the regions, in part owing to a 0.9 per cent reduction in capacity. Load factor rose 2.6 percentage points to 83 per cent, the highest for any region. Although the underlying growth trend has been improving for several months, recent months have seen considerable volatility in the data and some indication of weakness. The ongoing cuts in US federal spending (sequestration) could eventually impact economic growth and ultimately consumer spending.
- Latin American airlines also experienced very strong growth, with March demand up 11.8 per cent, second highest among all regions, reflecting the better performance of the region's economies. Capacity, however, climbed 13.3 per cent year-over-year and load factor declined one percentage point to 76.9 per cent. The region was the only one to experience a decline in load factor.
- African airlines' traffic climbed 8.2 per cent in March, while capacity rose 5.7 per cent, pushing load factor up to 67.8 per cent, still the lowest for any region. Although traffic declined 1.1 per cent compared to February, the region is seeing solid growth.
The Bottom Line
"Business confidence levels continue to foreshadow an economic upturn. It is important that governments avoid placing roadblocks to recovery. The flight delays and cancellations inflicted on air travellers to, from and within the US owing to sequestration-related budget cuts had the potential to inflict real damage to the economy if they had been permitted to continue," said Tyler.
"Fortunately, Congress and the Obama administration put aside partisan political disputes for the good of the economy. But aviation is far too important to be treated as a bargaining chip in political disputes in the first instance. Let's hope that lesson is well learned. The next challenge is to knock back the $5.5 billion in added taxes and charges in the administration's budget proposal, which represent a 29 per cent increase over the $19 billion in fees and taxes that airlines and air travellers paid last year. Under such conditions, the natural ability of aviation connectivity to catalyse economic growth and jobs is compromised," said Tyler.