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Understanding PMI And IPMI Market Size Per Country

One of the most frequently asked questions we get asked at iPMI Magazine is what is the size of market for PMI and iPMI by country, and globally?

Before we answer that, answer the following 2 questions:

If a Frenchman living in London buys an IPMI policy from a French broker who uses an Irish insurer that is part of a German group for cover in a Gulf state where insurance has to be fronted/shared by a local insurer; Which or how many of these 5 countries do you book the premium into? Which currency do you measure it in?

If an American living in Cuba buys an IPMI policy from a Bermuda broker for a job in Trinidad and uses a UK insurer that works from a local office in the USA but pays claims from a global claims centre in Romania, how many of the 6 countries do you book premium and claims to?

It isn't so simple is it?

Coupled with the following facts breaking down the market size for PMI and IPMI is a complex if not impossible task:

Back-in-the-day Insurers would publish detailed by product or by country info but now they try to avoid it, as it is competitive gold dust.

Many country figures only cover onshore health insurance and not offshore so can mislead you when looking at the market value in countries that do not demand local cover.

Some big European and American global insurers only publish on a vague regional basis, or on types that lumps health in with life and accident covers.

In many smaller countries the offshore IPMI market is far bigger than any onshore PMI or IPMI market - and in some countries there is no domestic health insurance at all.

Few countries demand annual insurer returns by product and those that do ask for vague health, accident and protection figures. The definition of protection is so vague, it is open to interpretation. 

Currency conversion is a huge problem too - 2015 figures from various big insurers show that income and profit figures can vary by plus or minus 30% depending on what currency and what conversion rates are used.

Internet Facts

In the complex world of IPMI there is no space for "Internet Facts".

Facts from a country, insurer or trade body, are generally reliable but even "official" figures have to be watched as within Health there can be hospital cash or top-up covers and other non full PMI or IPMI figures.

Where governments demand returns on health insurance or there are official competition enquiries then there are some excellent numbers to crunch.

Understanding The PMI And IPMI Report Market

Unfortunately in 2016 there are so many sub-standard boiler plate healthcare, insurance and expatriate reports. They claim to have health insurance country figures, but when you shell out thousands of pounds of R & D budget, and look for yourself, they mix accident and health and protection together; and strangely they all seem to predict growth for the next five years of 20% a year.

We have seen reports that profile the top ten insurers' and base the country figures just on the rough claimed figures- where the top ten miss out more than half the market.

There are reports which show insurers country market share but the total always seems to add up to well over 100%!

So, how can we understand the size of the PMI and IPMI market?

International And Expatriate Healthcare And Insurance 2016 is the only reliable source of information that can be trusted to answer your question and even then there are still some gaps. But this is critical: this report deals in facts, not crystal balls.

The 2016 edition is the result of over a decade of specialist research and report writing and is the answer for insurers, brokers and corporations who struggle to break the market down.

Where there is decent data available, it is included and all data has been carefully researched, checked and verified with no outlandish or generic claims made. Past performance is not always a representation of future results.

2016 IPMI Report Facts And Features That Will Help You Size The Market:

Download the 2016 report information kit, click here.

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Air Freight Makes Solid Start To 2016

Data for global air freight markets in January showing a rise in freight tonne kilometers (FTK) of 2.7% compared to January 2015. This continues the improving trend witnessed toward the end of 2015, and is the fastest pace since April of last year. The freight load factor (FLF) fell 1.8 percentage points, however, indicating that yields are likely to come under further pressure.

Total FTKs in January surpassed the previous all-time peak reached in February 2015. All regions except the smallest markets of Africa and Latin America expanded in January, but all regions reported declines in the FLF. Despite this good start, the underlying weak trade performance makes it unlikely that growth will accelerate significantly in the coming months.

“It is good news that volumes are growing, but yields and revenues are still under tremendous pressure. Air cargo plays a vital role in our globalized and fast-paced world in which trade is the foundation for long-term prosperity. Removing barriers to trade is a win-win. It will shore-up the foundations for stronger economies. And an improved business environment for air cargo will help facilitate much needed technology and process investments so that the industry will be an even stronger catalyst for growth and development. A third of the value of goods traded internationally are delivered by air. But the value of air cargo goes much deeper in the prosperity that it creates in supporting jobs and economic opportunity,” said Tony Tyler, IATA’s Director General and CEO.

Regional Analysis in Detail

African airlines’ FTKs declined by 1.4% in January compared to January 2015, and the FLF was 22.6%, down 4.8 percentage points, and the lowest of any region. The largest economies in the region, Nigeria and South Africa, are heavily dependent on energy industries and have been hit hard by the slump in global commodity prices.

Asia-Pacific carriers, which comprise almost 39% of all air freight, expanded by 1.3% year-over-year (although the international freight figure was a much lower 0.2%). The FLF fell 2.3 percentage points to 49.8%, still the highest of any region. Emerging Asia trade contracted in the second half of 2015 and in general trade to and from Asia-Pacific is weak.

European airlines’ demand grew by 2.5% in January but the FLF fell 1.5 percentage points, to 41.6%. Growth may have been flattered by the volatility and weakness seen a year ago. The growth trend for volumes looks weak for the months ahead, so there is a strong possibility that Europe could slip back into negative growth.

Latin American carriers continued the weak performance of recent months, declining by 3.6%. The FLF fell 2.7 percentage points, down to 32.9%. Brazil, the region’s largest economy, has struggled, particularly with the fall in the price of oil and other commodities.

Middle Eastern carriers resumed their strong growth trend, expanding 8.8% in January. The FLF was broadly stable, declining just 0.3 percentage points to 39.2%. The region’s airlines continue to enjoy strong growth, helped by large-scale network and fleet expansion.

North American airlines saw FTKs expand 2.5% in January compared to January 2015. The FLF was 34.6%, a fall of 1.4 percentage points. Following the spike in volumes due to last year’s West Coast ports strike, air freight from the US across the Pacific fell away. On the other hand trade with Europe, particularly imports, has increased.

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Strong Passenger Demand Continues into 2016

Global passenger traffic results for January 2016 showing demand (revenue passenger kilometers or RPKs) rose 7.1% compared to January 2015. This was ahead of the 2015 full year growth rate of 6.5%. January capacity rose 5.6%, with the result that load factor rose 1.1 percentage points to 78.8%, the highest load factor ever recorded for the first month of the year.

“January maintained the strong traffic growth trend seen in 2015, showing the resilience of demand for connectivity despite recent turmoil in equity markets. The record load factor is a result of strong demand for our product and airlines making the most productive use of their assets. Underlying conditions point to another strong year for passenger traffic, with the latest decline in oil prices likely providing additional stimulus for air travel growth,” said Tony Tyler, IATA’s Director General and CEO. 

January 2016 (% year-on-year)World share1RPKASKPLF (%-pt)​2PLF (level)​3
Total Market 100.0% 7.1% 5.6% ​1.1% ​78.8%
Africa 2.2% 11.0% 7.1% ​2.5% ​71.3%
Asia Pacific 31.5% 10.4% 7.9% ​1.8% ​78.5%
Europe 26.7​% ​4.0% 2.1% ​1.4% ​77.9%
Latin America 5.4% ​5.1% 4.6% ​0.4% ​82.8%
Middle East ​​9.4% 10.5% 12.8% ​-1.6% ​77.9%
North America 24.7% 4.3​​% ​2.9% ​1.1% ​80.7%
(1)% of industry RPKs in 2015  (2)Year-on-year change in load factor  (3)Load factor level

International Passenger Markets

January international passenger traffic rose 7.3% compared to the year-ago period. Capacity rose 5.9% and load factor rose 1.0 percentage point to 78.8%. All regions recorded year-over-year increases in demand.
 
  • Asia Pacific carriers recorded an increase of 10.3% compared to January 2015. Capacity rose 7.6%, pushing up load factor 2.0 percentage points to 79.2%. A 7.3% increase in the number of direct airport connections within the Asia region over the past 12 months or so has helped to stimulate demand.
  • European carriers’ international traffic climbed 4.2% in January compared to the year-ago period. Capacity rose 2.6% and load factor rose 1.2 percentage points to 78.8%. Airline strikes and the shutdown of Russia’s Transaero caused the region’s traffic to fall in the last quarter of 2015. Volumes have picked up somewhat in recent months.
  • North American airlines saw demand rise 2.4% in January over a year ago. Capacity rose 1.3%, pushing up load factor 0.8 percentage points to 80.3%. North American international traffic growth was weakest among the regions, as carriers have focused on the stronger and larger domestic market.
  • Middle East carriers had the strongest year-over-year demand growth in January at 10.9%, helped by ongoing network and fleet expansion. Capacity rose 12.9% and load factor dipped 1.4 percentage points to 77.8%.
  • Latin American airlines’ traffic climbed 8.9% in January. Capacity rose 7.8% and load factor increased 0.8 percentage points to 82.5%, highest among the regions. Domestic traffic remains under pressure from economic difficulties in the region’s biggest economies, notably Brazil, but the strong growth in international demand shows little sign of slowing.
  • African airlines saw January traffic jump 12.1% compared to January 2015. This continues the strong upward trend in travel since mid-2015 that coincides with a jump in exports from the region over the same period. With capacity up 8.2%, load factor rose 2.5 percentage point to 71.3%.

Domestic Passenger Markets

Domestic air travel rose 6.8% in January year-on-year. Capacity rose 5.1% and load factor was 78.9%, up 1.3% percentage points. 
 
January 2016 (% year-on-year)World share1RPK​​ASKPLF (%-pt)​2PLF (level)​3
Domestic 36.4% 6.8% 5.1% 1.3% 78.9%
Australia 1.1% 3.8% 2.3% ​1.1% 76.9%
Brazil 1.4% -4.1% -2.6% ​-1.3% ​83.3%
China P.R. 8.4​% 11.9% 10.6% ​0.9% 79.1%
India 1.2% 22.9% 21.9% ​0.7% 84.7%
Japan ​​1.2% 1.2% -4.3% ​3.5% ​64.7%
Russian Federation 1.3% -2.0% -5.2% ​2.2% ​68.4%
​US ​15.4% 5.5%​ 3.7%​ ​1.4% ​81.0%
(1)% of industry RPKs in 2015  (2)Year-on-year change in load factor  (3)Load factor level
*Note: the seven domestic passenger markets for which broken-down data are available account for 30% of global total RPKs and approximately 82% of total domestic RPKs.
  • India’s domestic air travel soared 22.9% in January compared to a year ago. Growth is being propelled by the comparatively strong domestic economy and increases in air services. The Indian market overtook both Australia and Japan during 2015 and is currently level with Russia at around 1.2% of global RPKs.
  • Russian domestic traffic slipped 2.0% in January. Despite the decline, the Russian domestic load factor reached an all-time January high as capacity fell at a faster rate, suggesting that local carriers have absorbed traffic affected by the shutdown of Transaero.
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VIDEO: Tom de Swaan, CEO a.i. On Zurich's Annual Results 2015

Zurich Insurance Group (Zurich) reported a business operating profit (BOP) of USD 2.9 billion and net income attributable to shareholders of USD 1.8 billion for the full-year ended December 31, 2015.

Chairman and Chief Executive Officer ad interim Tom de Swaan said, “This is a disappointing result, reflecting the previously announced challenges in our General Insurance business and restructuring charges, and we have taken rigorous actions to improve profitability. This includes re-underwriting or exiting unprofitable portfolios, increasing cost efficiency and further simplifying the organization. The remainder of the Group continues to perform well, with both Global Life and Farmers making further progress in the execution of their strategies.”

“Given the challenges within General Insurance, it is unlikely that the Group will achieve its target of a business operating profit after tax return on equity of 12-14% in 2016. Nevertheless, Zurich is on track to achieve its other targets for 2014 to 2016. The Zurich Economic Capital Model ratio stood at 114% as at the end of September, within our target range, and the Group expects to deliver cash remittances in excess of USD 10 billion for the period, well ahead of our target.”

“Given the Group’s healthy cash generation and the strong capital position the Board proposes an unchanged dividend of CHF 17 per share. The Board has also concluded that it is important to maintain the Group's capital strength and flexibility in the current circumstances and has, therefore, decided not to return additional capital to investors at this time.”

“We have accelerated our efficiency program and now aim to exceed the previously communicated cost savings target for 2016 of USD 300 million, and are on our way to achieving group-wide cost savings of more than USD 1 billion by the end of 2018. These savings will be achieved through the application of new technology, lean processes and the offshoring and near shoring of some activities. We estimate that as a result of these necessary measures around 8000 roles across Zurich will be affected by the end of 2018. This figure includes initiatives completed or announced in 2015.”

“Our key priorities in 2016 will be turning around our General Insurance business and continuing actions to position the Group for 2017 and beyond, including enhancing efficiency and sharpening the Group’s retail footprint. We have an excellent management team in place that will be further strengthened with the arrival of Mario Greco, who will lead preparations for the new strategic cycle.”

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Travel Insurance Claims Soar As Families Hit The Slopes

February half term is the most dangerous time of the year for a trip to the slopes, with more than twice the average number of winter sports travel claims this week, compared to the rest of the ski season. This is according to travel insurance claims data revealed by Aviva.1

New research from the travel insurer also reveals that six out of 10 (57%) parents would consider taking a winter sports break with their family2, citing good activities for children (23%) and health and fitness benefits (22%) as their main reasons.

Accessibility and location (15%) are also popular motivations for parents, although one in eight (13%) say that they would consider winter sports holidays because summer breaks during school holidays are too expensive.

Accidents on the slopes

Additional Aviva research shows that health and safety at winter resorts is a top priority for many parents, with more than half admitting that either they or an immediate family member had suffered an accident or near-miss while on the slopes3. However, more than half (55%) say they only sometimes take out travel insurance when going on holiday with their family2, and a similar number (47%) say they don’t always make sure they have cover that specifically covers winter sports.

Adam Beckett, propositions director for Aviva, said:

“A medical emergency is the most common reason for claiming on winter sports insurance and the cost of treating minor injuries can be expensive – the average cost of a winter sports claim is around £1,000. The largest winter sports claim settled by Aviva in recent years was for a customer who suffered a hip injury while skiing in Austria, the cost of which was over £15,000.

“The EHIC card offers state-provided emergency medical treatment in EEA countries. However, the level of treatment varies between countries and it may not cover all the treatment costs and services that are free through the NHS. It will not provide the same levels of cover that insurance does and would not cover a rescue from a mountain top or repatriation home if you needed it.

“For example, the cost of bringing someone with a damaged spinal cord home to the UK by air ambulance could be in the region of £20,000 from the European Union, or even as much as £80,000 from the United States.”

In spite of parents’ attention to health and safety, not all insist that their children wear helmets when taking part in winter sports. The Aviva poll showed that only four out of five parents would insist their children always wore helmets2, potentially meaning a heightened risk of injury for some youngsters on the slopes.

Adam Beckett adds: “Some resorts may not enforce the use of helmets for children, so check their guidelines. If they don’t, and your children are hitting the slopes this half term, make sure their equipment is in good order and they wear a helmet.”

For more tips and advice for a safe winter sports holiday, visit: http://www.aviva.co.uk/life/family-life/ski-hacks/

Aviva’s top 10 tips for staying safe on the slopes

  1. Take out the right winter sports travel insurance package. Make sure your travel insurance suits your needs before you buy it and keep your travel insurance medical emergency helpline number and your policy number to hand.
  2. Make sure your skiing equipment - or the gear you hire - is in good order. 
  3. Don’t borrow skiing equipment - it should fit your height, weight and skill level.
  4. Wear a protective headgear or a helmet - make a helmet mandatory for your children.
  5. Take lessons if you’ve never skied before. If you haven’t been on the piste for a while, a lesson or two will polish up your skills.
  6. Remember that skiers or boarders in front or below you on the piste have right of way. 
  7. Know your limits - ski or snowboard to your skill level on the nursery slopes, the green (beginner), blue (intermediate), red (intermediate/advanced) or black (advanced) runs.
  8. Respect the mountain and make sure you obey all warning signs - especially during avalanche season. Never go off-piste unless you are authorised to do so by the resort. If you are authorised to go off-piste, don’t ski or board alone, go with a qualified guide. Under Aviva Travel Insurance, you will not be covered for off-piste skiing unless you are accompanied by a qualified guide.
  9. Carry a fully charged mobile phone with you. 
  10. Don’t drink and ski. Excess alcohol will slow your reactions and affect your observation and balance.

1 Based on Aviva claims data, 01 January 2012 to 31 December 2014 (inclusive).

2 Based on a study of 537 parents who take holidays with children aged 0-16. Research commissioned by Aviva and carried out by ICM research 29-31 January, 2016.

3 Based on research commissioned by Aviva in a One Poll survey of over 1,000 parents who go on winter sports holidays with their children (aged 0-16 years old).

* The EHIC card entitles you to: state-provided emergency medical treatment in European Economic Area (EEA) countries. However, the level of state-provided emergency medical treatment will vary between countries and it may not cover all the treatment costs and services that are free through the NHS. For example, the following ARE covered by a typical travel insurance policy but NOT by the EHIC:

- Rescue services (eg from mountain in ski resort)
- Additional accommodation & travel costs if you need treatment or need to return to the UK
- Accommodation you have lost through being hospitalised
- Repatriation back to the UK
- Support and advice through 24 hour helplines with multi-lingual staff

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Air Freight Growth Slowed To 2.2% In 2015

Global air freight markets showing cargo volumes measured in freight tonne kilometers (FTKs) expanded 2.2% in 2015 compared to 2014. This was a slower pace of growth than the 5.0% growth recorded in 2014. The weakness reflects sluggish trade growth in Europe and Asia-Pacific.

After a strong start, air freight volumes began a decline that continued through 2015, until some improvements to world trade drove a modest pick-up late in the year. Cargo in Asia-Pacific, accounting for around 39% traffic, expanded by a moderate 2.3%. The key markets of Europe and North America, which between them comprise around 43% of total cargo traffic, were basically flat in 2015. Latin America suffered a steep decline (-6.0%) while the Middle East grew strongly, up 11.3%. Africa also saw modest growth of 1.2%. The freight load factor (FLF) was at times the lowest for some years, falling to an average 44.1% compared to 45.7% in 2014, driven down by weak demand and capacity expansion.

“2015 was another very difficult year for air cargo. Growth has slowed and revenue is falling. In 2011 air cargo revenue peaked at $67 billion. In 2016 we are not expecting revenue to exceed $51 billion. Efficiency gains are critical as the sector adjusts to shortening global supply chains and evermore competitive market conditions. We have to adjust to the ‘new normal’ of cargo growing in line with general rates of economic expansion. The industry is moving forward with an e-freight transformation that will modernize processes and improve the value proposition. The faster the industry can make that happen, the better,” said Tony Tyler, IATA’s Director General and CEO.

The industry’s key challenges will be discussed in detail at the World Cargo Symposium (WCS) in Berlin, 15-17 March. The world’s largest gathering of air cargo professionals, the 10th WCS will bring together 1,000 delegates under the theme of ‘The Value of Air Cargo’ to debate solutions for strengthening air cargo and the vital service it performs for the world economy.  
 
Dec 2015 vs. Dec 2014FTK GrowthAFTK GrowthFLF
International 0.7% 6.6% 47.4
Domestic 1.4% 6.2% 30.8
Total Market 0.8% 6.5% 43.9
YTD 2015 vs. YTD 2014FPK GrowthAFTK GrowthFLF
International 2.5% 6.4% 47.6
Domestic 0.1% 4.6% 29.6
Total Market 2.2% 6.1% 44.1

Regional Analysis in Detail

The global freight growth rate in December was 0.8% compared to December 2014. Within that range there were considerable regional fluctuations. 

African airlines FTKs declined by 8.4% in December although for 2015 as a whole the region grew by 1.2%. The FLF in 2015 was 29.7%, the lowest of any region. The underperformance of the Nigerian and South African economies was a challenge throughout the year, but trade growth to and from the region was sufficient to drive a modest expansion in FTKs.

Asia-Pacific carriers were basically flat in December, expanding just 0.1%. For the whole of 2015, the region grew 2.3%. The FLF for 2015 was 53.9%, the highest of any region. Cargo expansion in the region has been hampered by a shift in Chinese economic policy to favour domestic consumption. A mid-year fall of 8% in trade to/from emerging Asia also led to declines but this appears to have bottomed out, with a rebound in the second half of the year.

European airlines grew by 1.2% in December but the performance for 2015 in total was a fall of 0.1% compared to 2014. The FLF in 2015 was 44.9%. Economic conditions in the Eurozone have been subdued, leading to suppressed demand for air freight, but imports have improved in recent months.

Latin American carriers continued the weak performance of recent months, declining by 6.2% in December and by 6.0% for 2015 as a whole. This was the weakest performance of any region. The average FLF for 2015 was 38.3%. Economic and political conditions in Brazil have worsened, and regional trade activity has been volatile.

Middle Eastern carriers grew 4.0% in December and for 2015 in total the region expanded 11.3% compared to 2014. The FLF was 42.8% for 2015. The region enjoyed a strong year as network expansion into emerging markets was supported by economic growth in local economies. Political instability and the fall in the oil price may impact on some economies in the region but growth as a whole remains robust enough to support further expansion in 2016.

North American airlines saw FTKs expand 1.4% in December compared to December 2014. For the year as a whole, North America grew just 0.1%. The 2015 FLF was 34.3%. Growth in 2015 faded after a strong start that was flattered by the West Coast ports strike. Recently there have been mixed signals from economic data, indicating an uncertain outlook for air freight in the coming months.
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VIDEO: Demand For Air Travel In 2015 Surges To Strongest Result In 5 Years

Global passenger traffic results for 2015 shows demand rose 6.5% for the full year compared to 2014. This was the strongest result since the post-Global Financial Crisis rebound in 2010 and well above the 10-year average annual growth rate of 5.5%. While economic fundamentals were weaker in 2015 compared to 2014, passenger demand was boosted by lower airfares. After adjusting for distortions caused by the rise of the US dollar, global airfares last year were approximately 5% lower than in 2014.

“Last year’s very strong performance, against a weaker economic backdrop, confirms the strong demand for aviation connectivity. But even as the appetite for air travel increased, consumers benefitted from lower fares compared to 2014,” said Tony Tyler, IATA’s Director General and CEO.

Annual capacity rose 5.6% last year, with the result that load factor climbed 0.6 percentage points to a record annual high of 80.3%. All regions experienced positive traffic growth in 2015. Carriers in the Asia-Pacific region accounted for one-third of the total annual increase in traffic.

Dec 2015 vs. Dec 2014RPK GrowthASK GrowthPLF
International 5.6% 5.9% 78.1
Domestic 5.1% 4.2% 79.9
Total Market 5.4% 5.3% 78.8
YTD 2015 vs. YTD 2014RPK GrowthASK GrowthPLF
International 6.5% 5.9% 79.7
Domestic 6.3% 5.2% 81.5
Total Market 6.5% 5.6% 80.3

International Passenger Markets

International passenger traffic rose 6.5% in 2015 compared to 2014. Capacity rose 5.9% and load factor rose 0.5 percentage points to 79.7%. All regions recorded year-over-year increases in demand.

  • Asia Pacific carriers recorded a demand increase of 8.2% compared to 2014, which was the largest increase among the three largest regions. Demand was stimulated by a 7.3% increase in the number of direct airport connections in the region, resulting in time-savings for travelers. Capacity rose 6.4%, pushing up load factor 1.3 percentage points to 78.2%.
  • European carriers’ international traffic climbed 5.0% in 2015. Capacity rose 3.8% and load factor increased 1.0 percentage point to 82.6%, highest among the regions. The healthy result in part was attributable to a pick-up in consumer spending in the Eurozone as well as a moderate increase in flight frequencies. Traffic growth slowed toward the end of the year owing to strikes at Lufthansa and the shutdown of Russia’s Transaero.
  • North American airlines saw demand rise 3.2% in 2015, broadly unchanged from the growth achieved in 2014. Capacity rose 3.1%, edging up load factor 0.1 percentage points to 81.8%.
  • Middle East carriers had the strongest annual traffic growth at 10.5%. As a result, the share of international traffic carried by Middle East airlines reached 14.2%, surpassing their North American counterparts (13.4%). Capacity growth of 13.2% exceeded the demand gains, pushing down load factor 1.7 percentage points to 76.4%.
  • Latin American airlines’ traffic rose 9.3% in 2015. Capacity rose 9.2% and load factor inched up 0.1 percentage points to 80.1%. While key regional economies, particularly Brazil, have been struggling, overall traffic has been robust.
  • African airlines had the slowest annual demand growth, up 3.0%, although this was a significant improvement over the 0.9% annual growth achieved in 2014. With capacity up just half as much as traffic, load factor climbed 1 percentage point to 68.5%. International traffic rose strongly in the second half of 2015, in conjunction with a jump in trade activity to and from the region.

Domestic Passenger Markets

Domestic air travel rose 6.3% in 2015. All markets showed growth, led by India and China but there was wide variance. Capacity rose 5.2% and load factor was 81.5%, up 0.9 percentage points over 2014.
 
Dec 2015 vs. Dec 2014RPK GrowthASK GrowthPLF
Australia 3.2% 1.2% 77.9
Brazil -5.4% -4.0% 80.1
China P.R. 8.2% 8.2% 76.7
​India 25.0​% ​25.2% ​87.5
​Japan 1.2​% ​-2.9% ​64.7
Russian Federation ​​-3.4% -8.0% ​70.0
US 4.9% 4.1​​% ​84.1
Domestic 5.1% 4.2% 79.9
  • Brazil’s domestic air travel rose just 0.8% in 2015, reflecting the country’s deteriorating economic situation. Traffic trended downward throughout the year.
  • US domestic traffic climbed 4.9% last year, helped by solid economic growth. This was the fastest rate of increase since 2004 and the first time since 2003 that domestic traffic growth surpassed international growth. The load factor reached a domestic record high of 85.4%.
The Bottom Line: “Aviation delivered strong results for the global economy in 2015, enabling connectivity and helping to drive economic development. The value of aviation is well understood by friends and families whom aviation brings together, by business travelers meeting clients in distant cities, and particularly by those for whom aviation is a lifeline in times of crisis.
 
“It is very disappointing to see that some governments still wrongly believe that the value of taxes and charges that can be extracted from air transport outweighs the benefits—economic and social—of connectivity. The most recent example is the dramatic increase in the Italian Council Tax levied on air passengers. This 33-38% hike will damage Italian economic competitiveness, reduce passenger numbers by over 755,000 and GDP by EUR 146 million per year. An estimated 2,300 jobs a year will be lost. At a time when the global economy is showing signs of weakening, governments should be looking for ways to stimulate spending, not discourage it.”
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International Tourist Arrivals Up 4% Reach A Record 1.2 Billion In 2015

International tourist arrivals grew by 4.4% in 2015 to reach a total of 1,184 million in 2015, according to the latest UNWTO World Tourism Barometer. Some 50 million more tourists (overnight visitors) travelled to international destinations around the world last year as compared to 2014. 

2015 marks the 6th consecutive year of above-average growth, with international arrivals increasing by 4% or more every year since the post-crisis year of 2010.

“International tourism reached new heights in 2015. The robust performance of the sector is contributing to economic growth and job creation in many parts of the world. It is thus critical for countries to promote policies that foster the continued growth of tourism, including travel facilitation, human resources development and sustainability” said UNWTO Secretary-General, Taleb Rifai.

Demand was strong overall, though with mixed results across individual destinations due to unusually strong exchange rate fluctuations, the drop in oil prices and other commodities which increased disposable income in importing countries but weakened demand in exporters, as well as increased safety and security concerns.

“2015 results were influenced by exchange rates, oil prices and natural and manmade crises in many parts of the world. As the current environment highlights in a particular manner the issues of safety and security, we should recall that tourism development greatly depends upon our collective capacity to promote safe, secure and seamless travel. In this respect, UNWTO urges governments to include tourism administrations in their national security planning, structures and procedures, not only to ensure that the sector’s exposure to threats is minimised but also to maximise the sector’s ability to support security and facilitation, as seamless and safe travel can and should go hand in hand”, added Mr Rifai.

Growth in advanced economy destinations (+5%) exceeded that of emerging economies (+4%), boosted by the solid results of Europe (+5%).

By region, Europe, the Americas and Asia and the Pacific all recorded around 5% growth in 2015. Arrivals to the Middle East increased by 3% while in Africa, limited data available, points to an estimated 3% decrease, mostly due to weak results in North Africa, which accounts for over one third of arrivals in the region.

Positive prospects for 2016

Results from the UNWTO Confidence Index remain largely positive for 2016, though at a slightly lower level as compared to  the previous two years. Based on the current trend and this outlook, UNWTO projects international tourist arrivals to grow by 4% worldwide in 2016.

By region, growth is expected to be stronger in Asia and the Pacific (+4% to +5%) and the Americas (+4% to +5%), followed by Europe (+3.5% to +4.5%). The projections for Africa (+2% to 5%) and the Middle East (+2% to +5%) are positive, though with a larger degree of uncertainty and volatility.

2015 Regional Results

Europe (+5%) led growth in absolute and relative terms supported by a weaker euro vis-à-vis the US dollar and other main currencies. Arrivals reached 609 million, or 29 million more than in 2014. Central and Eastern Europe (+6%) rebounded from last year’s decrease in arrivals. Northern Europe (+6%), Southern Mediterranean Europe (+5%) and Western Europe (+4%) also recorded sound results, especially considering the many mature destinations they comprise.

Asia and the Pacific (+5%) recorded 13 million more international tourist arrivals last year to reach 277 million, with uneven results across destinations. Oceania (+7%) and South-East Asia (+5%) led growth, while South Asia and in North-East Asia recorded an increase of 4%.

International tourist arrivals in the Americas (+5%) grew 9 million to reach 191 million, consolidating the strong results of 2014. The appreciation of the US dollar stimulated outbound travel from the United States, benefiting the Caribbean and Central America, both recording 7% growth. Results in South America and North America (both at +4%) were close to the average.

International tourist arrivals in the Middle East grew by an estimated 3% to a total of 54 million, consolidating the recovery initiated in 2014.

Limited available data for Africa points to a 3% decrease in international arrivals, reaching a total of 53 million. In North Africa arrivals declined by 8% and in Sub-Saharan Africa by 1%, though the latter returned to positive growth in the second half of the year. (Results for both Africa and Middle East should be read with caution as it is based on limited available data)

China, the USA and the UK lead outbound travel growth in 2015

A few leading source markets have driven tourism expenditure in 2015 supported by a strong currency and economy.

Among the world’s top source markets, China, with double-digit growth in expenditure every year since 2004, continues to lead global outbound travel, benefitting Asian destinations such as Japan and Thailand, as well as the United States and various European destinations.

By contrast, expenditure from the previously very dynamic source markets of the Russian Federation and Brazil declined significantly, reflecting the economic constraints in both countries and the depreciation of the rouble and the real against virtually all other currencies.

As for the traditional advanced economy source markets, expenditure from the United States (+9%), the world’s second largest source market, and the United Kingdom (+6%) was boosted by a strong currency and rebounding economy. Spending from Germany, Italy and Australia grew at a slower rate (all at +2%), while demand from Canada and France was rather weak. 

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International And Domestic Passenger Markets Show Healthy November Traffic Demand

Global passenger traffic results for November 2015 showing continued strong traffic growth above the 10-year average rate of 5.6%. Total revenue passenger kilometers (RPKs) rose 5.9% compared to the year-ago period. Although below the October rate of 7.1%, this largely was owing to the impact of factors that are expected to be short-lived, including the cessation of operations by Transaero, Russia’s second largest carrier, and labor strikes at Lufthansa.

The healthy demand continued despite some softening in economic growth, in large part owing to falling fares. Data for the first ten months of the year show a 5% decline in average fares in currency-adjusted terms. November capacity (available seat kilometers or ASKs) increased by 4.2%, and load factor rose 1.3 percentage points to 78.0%. 

“Consumers continue to benefit from lower fares, which are spurring demand. The economy benefits from the stimulus to consumer spending. And airlines are starting to achieve minimum acceptable profit levels. It’s good news all around, but as we open 2016, economic risks are mounting,” said Tony Tyler, IATA’s Director General and CEO. 

Nov 2015 vs. Nov 2014RPK GrowthASK GrowthPLF
International 5.6% 4.1% 76.2
Domestic 6.4% 4.4% 81.1
Total Market 5.9% 4.2% 78.0
YTD 2015 vs. YTD 2014RPK GrowthASK GrowthPLF
International 6.8% 6.1% 79.8
Domestic 6.4% 5.3% 81.6
Total Market 6.7% 5.8% 80.5

International Passenger Markets

November international passenger demand rose 5.6% compared to November 2014, with airlines in all regions recording growth. Total capacity climbed 4.1%, and load factor edged up 1.1 percentage points to 76.2%.

  • Asia-Pacific airlines’ November traffic climbed 7.9% compared to the year-ago period. Capacity increased 5.7% and load factor rose 1.6 percentage points to 76.2%. Weakness in Emerging Asia trade activity, as well as slower than expected growth in China, appear not to be impacting international RPKs for Asia-Pacific carriers.
  • European carriers saw demand increase by 2.2%. The lower growth primarily was triggered by the aforementioned shutdown of Transaero and labor issues at Lufthansa. Capacity slipped 0.1% and load factor rose 1.7 percentage points to 79.5%, highest among the regions.
  • North American airlines’ traffic climbed 2.1% in November. While this was weaker than the year-to-date trend of 3.4%, capacity dipped 0.2%, boosting load factor 1.8 percentage points to 78.4%.
  • Middle East carriers had a 9.8% demand increase in November. Capacity rose slightly faster at 11.5% causing load factor to dip 1.0 percentage point to 69.4%. Business conditions across the non-oil producing private sectors of the UAE and Saudi Arabia appear to be strengthening, and this should help sustain solid expansion in air passenger demand for local carriers.
  • Latin American airlines saw November traffic climb 10.7% compared to November 2014. Capacity increased by 10.1%, pushing load factor up 0.3 percentage points to 78.9%. Latin American carriers have seen robust growth in air travel, but significant declines in yields, with weakness in the key economies of Brazil and Argentina, placing significant downward pressure on financial performance.
  • African airlines’ experienced their fifth consecutive month of positive traffic growth in November, posting a 12.2% rise compared to November 2014. However, the trend for the year-to-date so far remains weak, with growth of just 1.3% reflecting adverse economic developments in parts of the continent, including in Nigeria, which is highly reliant on oil revenues. Over the past few months, exports from Africa have held up better than they did earlier in 2015, and this could be helping boost international air travel on the region’s carriers. Capacity rose 9.8% and load factor rose 1.5 percentage points to 65.1%.

Domestic Passenger Markets

Domestic travel demand rose 6.4% in November compared to November 2014 but results were mixed, with Brazil, Russia and Japan all showing declines. Domestic capacity climbed 4.4%, and load factor improved 1.6 percentage points to 81.1%. 

Nov 2015 vs. Nov 2014RPK GrowthASK GrowthPLF
Australia 1.9% 1.0% 79.4
Brazil -7.9% -4.1% 78.0
China P.R. 8.4% 7.7% 80.4
​India ​25.1% 19.8​% ​83.6
​Japan -1.2​% -2.5​% ​71.2
Russian Federation -7.1​​% -10.6​​% ​71.7
US 9.1​​% 5.3​​% ​84.5
Domestic 6.4​​% 4.4​​% ​81.1
  • India’s strong results reflect notable increases in service frequencies, ongoing economic strength and the timing of the Diwali holiday, which occurred in October in 2014.
  • Air travel in Japan declined but measures of manufacturing activity improved strongly during the month, which should support rising passenger demand.
The Bottom Line: “The airline industry is delivering solid financial and operational performance. The industry’s return on capital for 2015 and 2016 is expected to exceed its cost of capital—a very rare occurrence. This means we are on the path toward financial sustainability. Consumers are benefitting from lower fares, and airlines are able to invest in new aircraft that are more comfortable, quieter and more environmentally friendly.
 
Passenger demand remains strong; however, the ongoing turmoil in the global financial markets and concerns over slowing economic growth in China are casting a shadow over the New Year.
2016 will be a historic year for aviation as States come together at the 39th International Civil Aviation Organization Assembly to discuss—and I hope agree—a market-based-measure that will allow airlines to achieve carbon-neutral growth from 2020,” said Tyler.
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Indian Economy Suffers $3bn Loss From Persistent Floods Amid Low Insurance Penetration

Impact Forecasting launches the latest edition of its monthly Global Catastrophe Recap report, which evaluates the impact of the natural disaster events that occurred worldwide during November 2015

The report reveals that an enhanced North East Monsoon – almost certainly impacted by current El Niño conditions – brought weeks of torrential rainfall to southern India and Sri Lanka for much of November and early December, killing at least an estimated 386 people in the heavily impacted states of Tamil Nadu and Andhra Pradesh. The Chennaimetropolitan region in India was particularly damaged by the event.

Total economic losses in India were estimated to reach INR200 billion (USD3.0 billion), asIndia's General Insurance Corporation reported insurance claims of around INR20 billion (USD300 million).

Adityam Krovvidi, Head of Impact Forecasting Asia Pacific, said: "New economic developments in Asia are taking place in flood plains and marsh lands with scant attention to drainage, thus increasing run-off and flooding. The 100-year rainfall event in Chennaiexposed the inherent weakness of the one-dimensional nature of this economic pursuit, and highlights the need for serious introspection, implementation of mitigation measures and the redesign of urban landscapes. Risk assessment can play a major role in awareness and insurance in mitigating the financial hardships. The large gap between the economic and insured loss from the Chennai flood event further emphasises the need for greater insurance penetration in large industrialized cities in Asia. This will become even more important as Asian megacities continue to grow and the risk of major urban flood events increases."

Elsewhere during November, a series of early season winter storms brought periods of frigid temperatures, freezing rain, ice, heavy rainfall, and the season's first major snowfall to many areas of the U.S., killing at least 18 people. The events led to major disruption to travel and caused widespread reports of damage from the Rockies to the Midwest. Total combined economic losses from the events were expected to exceed USD200 million.

Windstorms Heini and Nils (also known locally as "Barney" and "Clodagh") impacted parts of the United Kingdom and Western Europe in the latter part of the month. Total insured losses, primarily driven by Heini (Barney), were expected to exceed USD100 million.

Other natural hazard events to have occurred globally in November include:

  • One of the worst droughts in decades intensified in South Africa as water shortages affected 2.7 million households. Total economic losses were estimated to exceedUSD2.0 billion.
  • Nearly 100 tornadoes touched down in the U.S. in November across the Plains and Midwest.
  • Winter storms swept through northern China that led to minimal economic losses ofUSD268 million.
  • Noteworthy floods impacted portions of Southern Europe, China, and Saudi Arabia.
  • Severe thunderstorms caused tens of millions of dollars' (USD) of damage in South Africa and Australia.
  • A pair of rare cyclones made historic landfalls in Yemen, killing at least 26 people.
  • Multiple wildfires burned just to the north of South Australia's Adelaide, killing two people. The Insurance Council of Australia preliminarily cited 1,344 insurance claims worth AUD119.7 million (USD88 million).
  • A magnitude-5.5 earthquake struck southern Kyrgyzstan damaging almost 4,500 buildings in Osh Region.
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