How did August 2018 passenger demand do across the globe?
We know summer is the peak travel season in the Northern Hemisphere, so the headline may not be a surprise. And yet, if you would like to know at what pace air travel is increasing around the globe, reports from The International Air Transport Association (IATA) will do the job, as the organization represents some 290 airlines comprising 82% of global air traffic. The latest update from IATA – on global passenger traffic data for August 2018 – was released on October 1, 2018, showing that demand (RPKs) climbed 6.4% compared to the year-ago period, slightly above the 6.1% annual increase for July. Capacity (ASKs) increased by 5.5%, while load factor climbed 0.7% percentage point to 85.3%, – the highest for any month since at least 1990.
“The all-time record load factor reflects that airlines are maximizing the efficiency of their assets at a time of rising fuel prices and other costs that are limiting the opportunities for low fare stimulation, “ said Alexandre de Juniac, IATA's Director General and CEO, commenting on the continued strong traffic growth observed in August 2018.
Breaking down the numbers: international passenger markets
According to IATA’s data, this August international passenger demand rose 5.6% compared to August 2017, in line with 5.5% year-over-year growth achieved in July. All regions recorded increases, led by airlines in the Asia-Pacific region. Capacity climbed 5.1%, and load factor edged up 0.4 percentage point to 85.0%.
Asia-Pacific airlines' August 2018 traffic increased 7.5% compared to the year-ago period, which was an acceleration compared to a 7.2% rise in July. Capacity rose 6.1% and load factor rose 1.1 percentage points to 82.6%. IATA observes that the upward trend in passenger traffic remains very strong, supported by structural changes, including ongoing rises in living standards in the region, as well as more route options for passengers that translate into time savings and ultimately stimulate demand.
European carriers saw August demand climb 5.1% year-to-year, which was also an increase from the 4.5% growth recorded in July. However, in seasonally-adjusted terms, growth has tracked sideways since late spring. Capacity rose 4.5%, and load factor climbed 0.5 percentage point to 88.9%, – the highest among regions. However, the organization notes that European demand is being affected by mixed signs on the economy as well as possible disruptions from air traffic control strikes.
Middle Eastern carriers posted a 5.4% traffic increase in August 2018, which was a slowdown from 6.2% this July. Passenger volumes have trended upwards at an 8% annualized rate since the start of the year. Capacity increased 6.3%, with load factor slipping 0.7 percentage point to 80.7%.
North American airlines' international demand rose 3.7% compared to August a year ago. While this was a slowdown from 4.1% growth recorded in July 2018, this largely reflected developments a year ago rather than any change in the current healthy trend, IATA notes. Capacity rose 3.3%, and load factor grew by 0.4 percentage point to 87.2%.
Latin American airlines experienced a 4.8% demand increase in August 2018, compared to the same month last year, up from 3.5% annual growth in July. Capacity increased by 6.5% and load factor slid 1.3 percentage points to 81.4%. According to the association, year-to-year comparisons are distorted by the hurricane-related disruptions of a year ago, and traffic has largely tracked sideways since April in seasonally adjusted terms.
African airlines' traffic also climbed in August 2018, by 6.8%. While this was a slowdown from the 7.4% growth recorded this July the bigger picture is that demand remains strong, despite an increasingly challenging environment in the continent's largest economies. Notably, South Africa slipped back into recession in the second quarter and business confidence in Nigeria has moderated in recent months. Capacity rose 3.8%, and load factor surged 2.2 percentage points to 78.2%.
Let us not forget domestic passenger markets
IATA reports demand for domestic travel to have climbed 7.7% this August compared to August 2017, up from the 7.2% growth recorded this July. Capacity rose 6.2% and load factor increased 1.2 percentage points to 85.7%. All markets reported demand increases albeit with wide variation.
For instance, Indian airlines achieved their 48th consecutive month of double-digit traffic growth as demand rose 22.6%. IATA points out that traffic continues to be stimulated by sizeable increases in the number of domestic routes served. Meanwhile, China airlines' domestic traffic climbed 14.9% in August 2018, which was a four-month high. IATA maintains that in both China and India, huge demand increases are being supported by rising living standards and large increases in the number of flight choices.
Overview of world market share
The international air transport body also reported that total passenger traffic market shares by region of carriers in terms of RPK (measured in total revenue passenger kilometers) were: Asia-Pacific 33.7%, Europe 26.6%, North America 23.0%, Middle East 9.5%, Latin America 5.2%, and Africa 2.2%.
As for domestic RPKs, they accounted for about 36% of the total market. According to IATA, it is most important for North American airlines as it is about 66% of their operations. In Latin America, domestic travel accounts for 46% 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 45% of the region's operations. At the same time, it is less important for Europe and most of Africa where domestic travel represents just 11% and 14% of operations, respectively. And it is negligible for Middle Eastern carriers for whom domestic travel represents just 4% of operations.
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