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Passenger Demand Plunges on COVID-19 Travel Restrictions

Global passenger traffic data for February 2020 showing that demand (measured in total revenue passenger kilometers or RPKs) fell 14.1% compared to February 2019.

This was the steepest decline in traffic since 9.11 and reflected collapsing domestic travel in China and sharply falling international demand to/from and within the Asia-Pacific region, owing to the spreading COVID-19 virus and government-imposed travel restrictions. February capacity (available seat kilometers or ASKs) fell 8.7% as airlines scrambled to trim capacity in line with plunging traffic, and load factor fell 4.8 percentage points to 75.9%.

“Airlines were hit by a sledgehammer called COVID-19 in February. Borders were closed in an effort to stop the spread of the virus. And the impact on aviation has left airlines with little to do except cut costs and take emergency measures in an attempt to survive in these extraordinary circumstances. The 14.1% global fall in demand is severe, but for carriers in Asia-Pacific the drop was 41%. And it has only grown worse. Without a doubt this is the biggest crisis that the industry has ever faced,” said Alexandre de Juniac, IATA’s Director General and CEO.

FEBRUARY 2020 (% YEAR-ON-YEAR) WORLD SHARE RPK ASPK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100.0%
-14.1%
-8.7%
-4.8%
75.9%
Africa
2.1%
-0.7%
5.1
-3.9%
66.8%
Asia Pacific
34.7%
-41.3%
-28.2%
-15.1%
67.8%
Europe
26.8%
0.7%
1.2%
-0.5%
81.3%
Latin America
5.1%
3.1%
3.5%
-0.3%
81.2%
Middle East
9.0%
1.7%
1.5%
0.1%
72.5%
North America
22.2%
5.5%
4.7%
0.6%
81.1%

1-% of Industry RPKs in 2019 2-Year-on-year chnage in load factor 3-Load factor level

International Passenger Markets

February international passenger demand fell 10.1% compared to February 2019, the worst outcome since the 2003 SARS outbreak and a reversal from the 2.6% traffic increase recorded in January. Europe and Middle East were the only regions to see a year-over-year traffic rise. Capacity fell 5.0%, and load factor plunged 4.2 percentage points to 75.3%.

Asia-Pacific airlines’ February traffic plummeted 30.4% compared to the year-ago period, steeply reversing a 3.0% gain recorded in January. Capacity fell 16.9% and load factor collapsed to 67.9%, a 13.2-percentage point drop compared to February 2019.

European carriers’ February demand was virtually flat compared to a year ago (+0.2%), the region’s weakest performance in a decade. The slowdown was driven by routes to/from Asia, where the growth rate slowed by 25 percentage points in February, versus January. Demand  in markets within Europe performed solidly despite some initial flight suspensions on the routes to/from Italy. However, March data will reflect the impact of the spread of the virus across Europe and the related disruptions to travel. February capacity rose 0.7%, and load factor slipped 0.4 percentage point to 82.0%, which was the highest among regions.

Middle Eastern airlines posted a 1.6% traffic increase in February, a slowdown from the 5.3% year-over-year growth reported in January largely owing to a slowdown on Middle East-Asia-Pacific routes. Capacity increased by 1.3%, and load factor edged up 0.2 percentage point to 72.6%. 

North American carriers had a 2.8% traffic decline in February, reversing a 2.9% gain in January, as international entry restrictions hit home and volumes on Asia-North America routes plunged 30%. Capacity fell 1.5%, and load factor dropped 1.0 percentage point to 77.7%.

Latin American airlines experienced a 0.4% demand drop in February compared to the same month last year. This actually was an improvement over the 3.5% decline recorded in January. However, the spread of the virus and resulting travel restrictions will be reflected in March results. Capacity also fell 0.4% and load factor was flat compared to February 2019 at 81.3%.

African airlines’ traffic slipped 1.1% in February, versus a 5.6% traffic increase recorded in January and the weakest outcome since 2015. The decline was driven by around a 35% year-on-year traffic fall in the Africa-Asia market. Capacity rose 4.8%, however, and load factor sagged 3.9 percentage points to 65.7%, lowest among regions.

Domestic Passenger Markets

Demand for domestic travel dropped 20.9% in February compared to February 2019, as Chinese domestic market collapsed in the face of the government lockdown. Domestic capacity fell 15.1% and load factor dropped 5.6 percentage points to 77.0%.

FEBRUARY 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
36.2%
-20.9%
-15.1%
-5.6%
77.0%
Dom. Australia
0.8%
-4.0%
-1.2%
-2.2%
75.6%
Domestic Brazil
1.1%
3.8%
4.3%
-0.4%
82.0%
Dom. China P. R.
9.5%
-83.6%
-70.4%
-39.3%
48.5%
Domestic India
1.6%
8.4%
9.9%
-1.2%
88.1%
Domestic Japan
1.1%
-2.8%
3.9%
-4.7%
67.1%
Dom. Russia. Fed.
1.5%
7.7%
9.1%
-1.0%
75.7%
Domestic US
14.0%
10.1%
8.3%
1.3%
82.9%

1-% of Industry RPKs in 2019 2-Year-on-year chnage in load factor 3-Load factor level

Chinese airlines’ domestic traffic fell 83.6% in February, the worst outcome since IATA began tracking the market in 2000. With the easing of some restrictions on internal travel in March, domestic demand is showing some tentative signs of improvement.

US airlines enjoyed one of their strongest months in February, as domestic traffic jumped 10.1%. Demand fell  toward the end of the month, however, with the full impact of COVID-19 expected to show in March results.

The Bottom Line

“This is aviation’s darkest hour and it is difficult to see a sunrise ahead unless governments do more to support the industry through this unprecedented global crisis. We are grateful to those that have stepped up with relief measures, but many more need to do so. Our most recent analysis shows that airlines may burn through $61 billion of their cash reserves during the second quarter ending 30 June 2020. This includes $35 billion in sold-but-unused tickets as a result of massive flight cancellations owing to government-imposed travel restrictions. We welcome the actions of those regulators who have relaxed rules so as to permit airlines to issue travel vouchers in lieu of refunds for unused tickets; and we urge others to do the same. Air transport will play a much-needed role in supporting the inevitable recovery. But without additional government action today, the industry will not be in a position to help when skies are brighter tomorrow,” said de Juniac.

 

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Middle East And Africa Airlines Revenue Losses Mount

Governments in Africa and the Middle East need to provide financial relief to airlines as the latest IATA scenario for potential revenue loss by carriers in Africa and the Middle East reached US$23 billion (US$19 billion in the Middle East and US$4 billion in Africa).  This translates into a drop of industry revenues of 32% for Africa and 39% for the Middle East for 2020 as compared to 2019.

Some of the impacts at national level include:

Saudi Arabia

  • 26.7 million fewer passengers resulting in a US$5.61billion revenue loss, risking 217,570 jobs and US$13.6 billion in contribution to Saudi Arabia’s economy

UAE

  • 23.8 million fewer passengers resulting in a US$5.36 billion revenue loss, risking 287,863 jobs and US$17.7 billion in contribution to the UAE’s economy

Egypt

  • 9.5 million fewer passengers resulting in a US$1.6 billion revenue loss, risking almost 205,560 jobs and around US$2.4 billion in contribution to the Egyptian economy

Qatar

  • 3.6 million fewer passengers resulting in a US$1.32 billion revenue loss, risking 53,640 jobs and US$2.1billion in contribution to Qatar’s economy

Jordan

  • 2.8 million fewer passengers resulting in a US$0.5 billion revenue loss, risking 26,400 jobs and US$0.8 billion in contribution to Jordan’s economy

South Africa

  • 10.7 million fewer passengers resulting in a US$2.29 billion revenue loss, risking 186,850 jobs and US$3.8 billion in contribution to South Africa’s economy

Nigeria

  • 3.5 million fewer passengers resulting in a US$ 0.76 billion revenue loss, risking 91,380 jobs and US$0.65 billion in contribution to Nigeria’s economy

Ethiopia

  • 1.6 million fewer passengers resulting in a US$0.3billion revenue loss, risking 327,062 jobs and US$1.2 billion in contribution to Ethiopia’s economy

Kenya

  • 2.5 million fewer passengers resulting in a US$ 0.54 billion revenue loss, risking 137,965 jobs and US$1.1 billion in contribution to Kenya’s economy

To minimize the broad damage that these losses would have across the African and Middle East economies, it is vital that governments step up their efforts to aid the industry. Many governments in the region have committed to provide relief from the effect of COVID-19. And some have already taken direct action to support aviation including the United Arab Emirates. But more help is needed. IATA is calling for a mixture of:

  • direct financial support
  • loans, loan guarantees and support for the corporate bond market
  • tax relief

We are also starting to see several governments in the region providing some financial and tax reliefs, including deferral of aircraft lease payments by the government of Cabo Verde, extension of VAT refund payment dates in Saudi Arabia and positive considerations for financial relief from governments across the region including Jordan, Rwanda, Angola and the UAE.

“The air transport industry is an economic engine, supporting up to 8.6 million jobs across Africa and the Middle East and $186 billion in GDP. Every job created in the aviation industry supports another 24 jobs in the wider economy. Governments must recognize the vital importance of the air transport industry, and that support is urgently needed. Airlines are fighting for survival in every corner of the world. Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business. Failure by Governments to act now will make this crisis longer and more painful. Airlines have demonstrated their value in economic and social development in Africa and the Middle East and governments need to prioritize them in rescue packages. Healthy airlines will be essential to jump-start the Middle East and global economies post-crisis,” said Muhammad Al Bakri, IATA’s Regional Vice President for Africa and the Middle East.

In addition to financial support, IATA called for regulators to support the industry. Key priorities in Africa and the Middle East include:

  • Providing a package of measures to ensure air cargo operations, including fast track procedures to obtain overflight and landing permits, exempting flight crew members from 14-day quarantine, and removing economic impediments (overflight charges, parking fees, and slot restrictions).
  • Providing financial relief on Airport and Air Traffic Control (ATC) Charges and Taxes
  • Ensuring aeronautical information is published, timely, accurately, and without ambiguity, ensuring the airlines can plan and execute their flights

“Some regulators are taking positive action. We are grateful to the Ghana, Morocco, the UAE, Saudi Arabic and South Africa for agreeing a full-season waiver to the slot use rule. This will enable airlines and airports greater flexibility for this season and greater certainty for summer.  But there is more to do on the regulatory front. Governments need to recognize that we are in a crisis,” said Al Bakri.

Latest impact estimates, selected Africa, Middle East countries

NATION REVENUE IMPACT (US$, BILLIONS)

PASSENGER DEMAND IMPACT

( MILLIONS)

PASSENGER DEMAND IMPACT POTENTIAL JOBS IMPACT POTENTIAL GDP IMPACT (US$, BILLIONS)
Bahrain
-0.41
-2.1
-43%
-9,586
-0.38
Oman
-0.57
-3.3
-37%
-39,452
-1.3
Qatar
-1.32
-3.6
-37%
-53,640
-2.1
Saudi Arabia
-5.61
-26.7
-39%
-217,570
-13.6
UAE
-5.36
-23.8
-40%
-287,863
-17.7
Lebanon
-0.73
-3.56
-43%
-97,044
-2.5
Egypt
-1.66
-9.5
-35%
-205,560
-2.4
Jordan
-0.5
-2.8
-38%
-26,400
-0.8
Morocco
-1.30
-8.1
-38%
-372,081
-3.4
South Africa
-2.29
-10.7
-41%
-186,805
-3.8
Kenya
-0.54
-2.5
-36%
-137,965
-1.1
Ethiopia
-0.30
-1.6
-30%
-327,062
-1.2
Nigeria
-0.76
-3.5
-37%
-91,380
-0.65

 

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Asia-Pacific States Urgently Need To Support Their Airline Industry

IATA is urging Asia-Pacific states to take urgent action to provide financial support to their airline industry impacted by the COVID-19 crisis.

Major Asia-Pacific states could see passenger demand in 2020 reduced by between 34% to 44%. This is based on a scenario where severe restrictions on travel are lifted after 3 months, followed by gradual recovery. Cambodia (-34%), Vietnam (-34%) and the Philippines (-36%) will be on the lower end of the range, while Thailand (-40%), Pakistan (-40%), Republic of Korea (-40%) and Sri Lanka (-44%) will see the largest impact.

“Based on a scenario in which severe travel restrictions last for three months, the Asia-Pacific region as a whole will see passenger demand reduced by 37% this year, with a revenue loss of US$88 billion. While each country will see varying impact on passenger demand, the net result is the same – their airlines are fighting for survival, they are facing a liquidity crisis, and they will need financial relief urgently to sustain their businesses through this volatile situation,” said Conrad Clifford, IATA’s Regional Vice President, Asia-Pacific.

In its latest analysis, IATA expects airlines to post a net loss of US$39 billion during the second quarter ending 30 June 2020. The impact of that on cash burn will be amplified by a US$35 billion liability for potential ticket refunds. Without relief, the industry’s cash position could deteriorate by US$61 billion in the second quarter

Australia, New Zealand and Singapore have announced a substantial package of measures to support their aviation industry. “But others in the region, including India, Indonesia, Japan, Malaysia, the Philippines, Republic of Korea, Sri Lanka and Thailand, have yet to take decisive and effective action. Jobs as well as the GDP supported by the industry are at risk,” said Clifford. Details of the country impact can be found in the table below.

“Governments need to ensure that airlines have sufficient cash flow to tide them over this period, by providing direct financial support, facilitating loans, loan guarantees, and support for the corporate bond market. Taxes, levies, and airport and aeronautical charges for the industry should also be fully or partially waived. It is critical that these countries still have a viable aviation sector to support the economic recovery, connect manufacturing hubs and support tourism when the COVID-19 crisis is over. They need to act now – and urgently - before it is too late,” said Clifford.

Country Impact

NATION

PERCENTAGE CHANGE IN PASSENGER DEMAND (2020 VS 2019)

PASSENGER DEMAND IMPACT (ORIGIN-DESTINATION VOLUMES - 2020 VS 2019)

REVENUE IMPACT (US$, MILLIONS - 2020 VS 2019) POTENTIAL JOBS IMPACT (2020 VS 2019) POTENTIAL GDP IMPACT (US$, MILLIONS - 2020 VS 2019)
Australia
-39%
-38,366,000
-11,146
-278,200
-27,012
Bangladesh
-37%
-4,218,000
-842
-47,200
N/A
Bhutan
-32%
-167,800
-19
N/A
N/A
Brunei
-38%
-459,500
-89
-6,400
-352
Cambodia
-34%
-4,072,000
-677
-581,700
-1,595
Fiji
-39%
-877,400
-238
-49,300
-854
French Polynesia
-41%
-580,300
-244
N/A
N/A
India
-36%
-68,555,000
-8,838
-2,247,000
-12,709
Indonesia
-37%
-45,354,000
-6,433
-1,570,000
-8,999
Japan
-38%
-71,575,000
-17,765
-448,600
-34,962
Laos
-39%
-1,226,000
-171
-18,000
N/A
Malaysia
-39%
-25,493,000
-3,317
-169,700
-3,799
Maldives
-40%
-2,124,000
-507
-28,800
-1,236
Myanmar
-36%
-3,313,000
-540
-185,600
-685
Nepal
-39%
-2,607,000
-409
-175,100
N/A
New Caledonia
-41%
-386,700
-125
N/A
N/A
New Zealand
-38%
-9,769,000
-2,650
-128,300
-8,141
Pakistan
-40%
-7,540,000
-1,438
-198,200
N/A
Papua New Guinea
-42%
-961,700
-201
-17,300
N/A
Philippines
-36%
-21,878,000
-3,507
-419,800
-3,747
Solomon Islands
-39%
-104,200
-30
-11,500
-59
Republic of Korea
-40%
-45,142,000
-8,432
-287,700
-16,402
Sri Lanka
-44%
-3,105,000
-562
-313,000
-3,507
Thailand
-40%
-42,470,000
-6,516
-1,663,300
-25,118
Vanatatu
-35%
-205,600
-35
-3,700
-50
Vietnam
-34%
-24,171,000
-3,404
-749,700
-4,282

 

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25 Million Jobs At Risk With Airline Shutdown

New analysis from IATA showing that some 25 million jobs are at risk of disappearing with plummeting demand for air travel amid the COVID-19 crisis.

Globally, the livelihoods of some 65.5 million people are dependent on the aviation industry, including sectors such as travel and tourism. Among these are 2.7 million airlines jobs. In a scenario of severe travel restrictions lasting for three months, IATA research calculates that 25 million jobs in aviation and related sectors are endangered across the world:

  • 11.2 million jobs in Asia-Pacific
  • 5.6 million jobs in Europe
  • 2.9 million jobs in Latin America
  • 2.0 million jobs in North America
  • 2.0 million jobs in Africa
  • 0.9 million jobs in the Middle East

In the same scenario, airlines are expected to see full year passenger revenues fall by $252 billion (-44%) in 2020 compared to 2019. The second quarter is the most critical with demand falling 70% at its worst point, and airlines burning through $61 billion in cash.

Airlines are calling on governments to provide immediate financial aid to help airlines to remain viable businesses able to lead the recovery when the pandemic is contained. Specifically, IATA calls for:

  • Direct financial support
  • Loans, loan guarantees and support for the corporate bond market
  • Tax relief

“There are no words to adequately describe the devastating impact of COVID-19 on the airline industry. And the economic pain will be shared by 25 million people who work in jobs dependent upon airlines. Airlines must be viable businesses so that they can lead the recovery when the pandemic is contained. A lifeline to the airlines now is critical,” said Alexandre de Juniac, IATA’s Director General and CEO.

Looking Ahead: Re-booting the Industry

Alongside vital financial relief, the industry will also need careful planning and coordination to ensure that airlines are ready when the pandemic is contained.

“We have never shuttered the industry on this scale before. Consequently, we have no experience in starting it up. It will be complicated. At the practical level, we will need contingencies for licenses and certifications that have expired. We will have to adapt operations and processes to avoid reinfections via imported cases. And we must find a predictable and efficient approach to managing travel restrictions which need to be lifted before we can get back to work. These are just some of the major tasks that are ahead of us. And to be successful, industry and government must be aligned and working together,” said de Juniac.

IATA is scoping a comprehensive approach to re-booting the industry when governments and public health authorities allow. A multi-stakeholder approach will be essential. One initial step is a series of virtual meetings—or summits—on a regional basis, bringing together governments and industry stakeholders. The main objectives will be:

  • Understanding what is needed to re-open closed borders, and
  • Agreeing solutions that can be operationalized and scaled efficiently

“We are not expecting to re-start the same industry that we closed a few weeks ago. Airlines will still connect the world. And we will do that through a variety of business models. But the industry processes will need to adapt. We must get on with this work quickly. We don’t want to repeat the mistakes made after 9.11 when many new processes were imposed in an uncoordinated way. We ended up with a mess of measures that we are still sorting out today. The 25 million people whose jobs are at risk by this crisis will depend on an efficient re-start of the industry,” said de Juniac.

 

Read the Wider economic impact from air transport collapse report (pdf), presentation by Brian Pearce, IATA's Chief Economist

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Financial Impact Analysis Of The Novel Coronavirus (COVID-19) Public Health Emergency On The Global Air Transport Industry

The International Air Transport Association (IATA) updated its analysis of the financial impact of the novel coronavirus (COVID-19) public health emergency on the global air transport industry.

IATA now sees 2020 global revenue losses for the passenger business of between $63 billion (in a scenario where COVID-19 is contained in current markets with over 100 cases as of 2 March) and $113 billion (in a scenario with a broader spreading of COVID-19). No estimates are yet available for the impact on cargo operations.

IATA’s previous analysis (issued on 20 February 2020) put lost revenues at $29.3 billion based on a scenario that would see the impact of COVID-19 largely confined to markets associated with China. Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China.

Financial markets have reacted strongly. Airline share prices have fallen nearly 25% since the outbreak began, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003. To a large extent, this fall already prices in a shock to industry revenues much greater than our previous analysis.

To take into account the evolving situation with COVID-19, IATA estimated the potential impact on passenger revenues based on two possible scenarios:

Scenario 1: Limited Spread

This scenario includes markets with more than 100 confirmed COVID-19 cases (as of 2 March) experiencing a sharp downturn followed by a V-shaped recovery profile. It also estimates falls in consumer confidence in other markets (North America, Asia Pacific and Europe).

The markets accounted for in this scenario and their anticipated fall in passenger numbers, due to COVID-19, as are as follows: China (-23%), Japan (-12%), Singapore (-10%), South Korea (-14%), Italy (-24%), France (-10%), Germany (-10%), and Iran (-16%). Additionally, Asia (excluding China, Japan, Singapore and South Korea) would be expected to see an 11% fall in demand. Europe (excluding Italy, France and Germany) would see a 7% fall in demand and Middle East (excluding Iran) would see a 7% fall in demand.

Globally, this fall in demand translates to an 11% worldwide passenger revenue loss equal to $63 billion. China would account for some $22 billion of this total. Markets associated with Asia (including China) would account for $47 billion of this total.

Scenario 2: Extensive Spread

This scenario applies a similar methodology but to all markets that currently have 10 or more confirmed COVID-19 cases (as of 2 March). The outcome is a 19% loss in worldwide passenger revenues, which equates to $113 billion. Financially, that would be on a scale equivalent to what the industry experienced in the Global Financial Crisis. 

MARKET IMPACT ON PASSENGER NUMBERS IMPACT ON PASSENGER REVENUES
Australia, China, Japan, Malaysia, Singapore, South Korea, Thailand, Vietnam
-23%
-$49.7 billion
Rest of Asia Pacific
-9%
-$7.6 billion
Austria, France, Italy, Germany, Netherlands, Norway, Spain, Switzerland, Sweden, the United Kingdom
-24%
-$37.3 billion
Rest of Europe
-9%
-$6.6 billion

Bahrain, Iraq, Iran, Kuwait, Lebanon, the

United Arab Emirates
-23%
-$4.9 billion
Rest of Middle East
-9%
-$2.3 billion
Canada and US
-10%
-$21.1 billion

Note: Revenue loss figures are not additive due to overlaps of some markets, e.g., revenues for China and Germany both contain the revenues for the China-Germany market. Revenues are base fare revenues for all airlines flying to, from and within the country.

Africa and Latin America/Caribbean regions are not explicitly included in this market-based analysis, because there are currently no countries in either region with at least 10 COVID-19 cases.

Mitigation

Oil prices have fallen significantly (-$13/barrel Brent) since the beginning of the year. This could cut costs up to $28 billion on the 2020 fuel bill (on top of those savings which would be achieved as a result of reduced operations) which would provide some relief but would not significantly cushion the devastating impact that COVID-19 is having on demand. And it should be noted that hedging practices will postpone this impact for many airlines.

Impact

“The turn of events as a result of COVID-19 is almost without precedent. In little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse. It is unclear how the virus will develop, but whether we see the impact contained to a few markets and a $63 billion revenue loss, or a broader impact leading to a $113 billion loss of revenue, this is a crisis.

“Many airlines are cutting capacity and taking emergency measures to reduce costs. Governments must take note. Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies. As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times,” said Alexandre de Juniac, IATA’s Director General and CEO.

Read the full updated impact assessment (pdf)

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Passenger Demand Stays Solid But The Trend Has Slowed

Global passenger traffic results for May showing that demand (measured in revenue passenger kilometers, or RPKs) rose 4.5% compared to the same month in 2018.

This was in line with the revised April traffic growth of 4.4% and above the recent trough of 3.1% year-on-year growth recorded in March. However, it remains below the 20-year average growth rate of around 5.5%. Capacity (available seat kilometers or ASKs) climbed by a modest 2.7% and load factor rose 1.4 percentage points to 81.5%, surpassing last year’s record load factor of 80.1%. 

“Passenger demand growth has slowed compared to the past two years. This is in line with slumping global trade, rising trade tensions and weakening business confidence. In this challenging environment, airlines are managing capacity carefully in order to optimize efficiency,” said Alexandre de Juniac, IATA’s Director General and CEO. 

MAY 2019 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market 100.0% 4.5% 2.7% 1.4​% 81.5%
Africa 2.1% 2.2% 0.3% ​1.2% 67.6%
Asia Pacific 34.4% 4.5% 3.5% ​0.8% ​80.2%
Europe 26.7​% 5.4% 4.6% ​0.6% 83.7%
Latin America 5.1% ​6.5% 2.8% ​2.9% ​83.2%
Middle East ​​9.2% 0.7% -5.9% ​4.8% ​73.2%
North America 22.5% 4.5% 3.2% ​1.1% 85.1​%

1-% of Industry RPKs in 2018                2-Year-on-year chnage in load factor                 3-Load factor level 

International Passenger Markets

International traffic demand rose 4.3% in May over the year-ago period, which was down from 5.1% growth in April. All regions recorded growth, led by airlines in Latin America. Total capacity climbed 2.1%, with load factor jumping 1.7 percentage points to 80.4%.

  •  European carriers' May demand climbed 5.4% over May 2018, a deterioration from the 7.7% year-over-year growth recorded in April. Capacity rose 4.6% and load factor was up 0.7 percentage point to 84.2%, which was the highest among regions. Most of the region's growth, however, occurred in the first half of 2018, with demand moving broadly sideways since then.
  •  Asia-Pacific airlines saw their traffic rise 4.0% in May compared to the year-ago period, an improvement over the 2.9% increase in April. Capacity increased 3.0%, and load factor edged up 0.8 percentage point to 78.6%. This is the second consecutive monthly increase in demand, but it still represents a soft outcome in a region that regularly saw double-digit growth rates over the past few years. The US-China trade tensions continue to weigh upon growth in the region. 
  •  Middle East carriers' May demand growth decelerated to 0.8% compared to a year ago, from 3.3% annual growth recorded in April. This partly reflects the impact of the structural changes that are underway in the industry in the region. May capacity plunged 6.1%, and load factor soared 5 percentage points to 73.0%.
  •  North American airlines' traffic rose 4.8% in May compared to May 2018, a slowdown from 5.6% annual growth in April. Capacity climbed 2.7% and load factor strengthened 1.7 percentage points to 83.6%. The comparatively strong US domestic economy, and US dollar is helping to offset any trade-related softening in international travel.
  •  Latin American airlines experienced a strong 6.7% increase in traffic in May compared to the same month last year, which was well up from 5.1% growth in April. Passenger demand is currently holding up well, despite a challenging economic backdrop in a number of countries. Capacity climbed 4.0% and load factor jumped 2.1 percentage points to 84.0%, second highest among the regions.
  •  African airlines posted a 2.1% traffic rise in May compared to the year-ago period, which was up from just 1.1% growth in April. Capacity climbed 0.1% and load factor increased 1.3 percentage points to 67.0%. Traffic between Africa and Europe continues to expand strongly, but economic growth in South Africa – a key regional economy and air transport market– contracted sharply in the first quarter and this is adversely impacting air passenger demand.  

Domestic Passenger Markets

APRIL 2019 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic 36.0% 4.8% 3.8% 0.8% 83.4%
​Dom. Australia ​0.9% ​1.1% ​0.8 ​0.2% ​77.0%
Domestic Brazil 1.1% 1.3% -4.4% ​4.6% 81.4%
Dom. China P.R. 9.5% 7.6% 7.1% ​0.4% ​83.2%
Domestic India 1.6​% 6.0% 3.3% ​2.3% 90.1%
Domestic Japan 1.0% ​6.6% 2.0% ​3.1% ​71.6%
Dom. Russian Fed. ​​1.4% 10.6% 9.6% ​0.7% ​80.1%
Domestic US 14.1% 4.6% 3.9% ​0.6% 86.0%

1-% of Industry RPKs in 2018                2-Year-on-year chnage in load factor                 3-Load factor level 

Domestic traffic increased 4.8% in May compared to May 2018, well above the 3% year-over-year rise recorded in April. Russia was the only market to see double-digit demand growth. Domestic capacity rose 3.8% and load factor climbed 0.8 percentage point to 83.4%.

  •  Russia's domestic traffic rose 10.6% year-over-year, which is up slightly from the 10.4% year-over-year growth recorded for April. Russia continues to benefit from favorable economic conditions and lower airfares.
  •  Japan's domestic traffic rose 6.6% in May, up from 4.1% growth in April and the strongest performance since summer 2017. Fare stimulation, combined with robust economic growth, contributed to the result.

The bottom line

"Aviation is the business of freedom, connecting people and trade and creating new opportunities for growth and development. But to be effective, the business of freedom relies on borders that are open to the movement of people and goods—and aircraft. In recent weeks, we have seen extensive airspace closures owing to political tensions. These closures have contributed to longer and less efficient routings, higher operating costs and increased carbon emissions. Without any compromise on safety, it is vital that governments work to minimize airspace closures so that the Business of Freedom can continue to deliver its benefits as efficiently as possible," said de Juniac.

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3 Recommendations To Boost The Benefits Of Aviation In France

The International Air Transport Association (IATA) said that a strategic government agenda to improve competitiveness in France’s air transport sector could generate an additional 500,000 jobs and nearly €60 billion in extra GDP for the nation’s economy by 2037.

These conclusions were reached in a new IATA report on French air transport regulatory competitiveness, which contained three key recommendations to enhance air connectivity in France and boost economic and social opportunities in the country.

“Aviation is the business of freedom, and already creates considerable benefits for France. But France’s competitive position in Europe is notably weak in infrastructure costs, air traffic management efficiency, the quality of regulation, and the costs of social charges. There are huge opportunities for more jobs and greater economic growth if these weaknesses are addressed. The Assises Nationales du Transport Aérien explored these issues but with no significant follow-up measures taken to boost competitiveness. The launch of this competitiveness report with FNAM and the BAR France provides an opportunity to strengthen the foundations of the National Strategy for Air Transportation 2025, which was announced by Minister Borne at the Assises,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe.

At present, aviation generates approximately €100 billion in GDP and 1.1 million jobs in France. Maximizing the competitiveness of the aviation sector could see these numbers increase to nearly €160 billion and 1.6 million jobs, by 2037.

The report’s three key recommendations for France are:

1. Reform economic regulation, such as by strengthening the independent economic regulator, to ensure charges are cost-related and efficient.

2. Implement a French ATM strategy to maximize capacity and efficiency of air traffic management.

3. Adopt smarter regulation principles, for example, promoting offsetting rather than taxation to tackle CO2 impacts from aviation.

Robust Environmental Strategy

Adoption of these recommendations could see passenger demand in France grow from around 90 million today to 142 million under the most optimistic scenario. The successful accommodation of demand for air travel, however, must sit alongside a robust environmental strategy to ensure a sustainable future for flight.

“Aviation must earn its license to grow by demonstrating its environmental credentials. We have ambitious global targets for carbon-neutral growth from next year, and to cut net emissions to half of 2005 levels by 2050. These targets are compatible with the wider goals of the Paris Agreement. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will generate $40 billion in finance for carbon reductions, but it needs strong support from the French government to ensure its success. Key to that is to resist calls for unilateral measures such as aviation climate taxes, which will provide no environmental benefit and could undermine the international consensus for combined action on aviation carbon emissions,” said Schvartzman.

“The French Assises du Transport Aérien did not conclude with significant measures allowing the French air transport sector to become competitive versus its competitors. The weight of taxes, specific charges related to the sector, and the social charges in France are way above the European average and constitutes a heavy handicap for the airlines based in France,” highlighted Alain Battisti, President of FNAM and Chalair Aviation.

“The capacity of the airspace and connectivity are two essential elements to the economic and tourist development of a country” said Jean Pierre Sauvage, President of BAR France.

The report on French air transport competitiveness benchmarked France against the rest of Europe across five key areas.

  • Passenger facilitation: France has successfully implemented automated border control systems, but visa application processes are lengthy.
  • Cargo Facilitation: Adoption of digital cargo processes such as e-Air Waybill is low, but initiatives to improve cargo movement facilitation are under way.  
  • Supply Chain Management: France has among the highest passenger charges and taxes in Europe, increasing the cost of traveling by air, and hampering connectivity. 
  • Infrastructure Management: France could improve its capacity use of existing terminals and runways, to allow costs to be reduced in the short-term, and create sufficient capacity for future longer-term growth.
  • Regulatory Environment: Many regulations that apply in France are inconsistent with smarter regulation principles, particularly adopting a more systematic approach to consultation.
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Air Freight Demand Flat In November 2018

Data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), was flat (0%) in November 2018, compared to the same period the year before. This was the slowest rate of growth recorded since March 2016, following 31 consecutive months of year-on-year increases.

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 4.3% year-on-year in November 2018. This was the ninth month in a row that capacity growth outstripped demand.

While international e-commerce continues to grow, overall demand faced significant headwinds:

  • Signs of weakness in global economic activity;
  • A contraction in export order books in all major exporting nations, with the exception of the US; 
  • Shorter supplier delivery times in Asia and Europe;
  • Weakened consumer confidence compared to very high levels at the beginning of 2018.

“Normally the fourth quarter is a peak season for air cargo. So essentially flat growth in November is a big disappointment. While our outlook is for 3.7% demand growth in 2019, downside risks are mounting. Trade tensions are cause for great concern. We need governments to focus on enabling growth through trade, not barricading their borders through punitive tariffs,” said Alexandre de Juniac, IATA’s Director General and CEO.

NOVEMBER 2018 (% YEAR-ON-YEAR) WORLD SHARE1 FTK ASTK FLF (%-PT)​2 FLF (LEVEL)​3
Total Market 100.0% 0.0% 4.3% -2.2​% 51.5%
Africa 1.7% -7.8% -7.4% ​-0.2% 39.0%
Asia Pacific 36.1% -2.3% 3.1% ​-3.1% ​57.2%
Europe 23.4% -0.2% 3.1% ​-2.0% 57.9%
Latin America 2.6% ​3.1% 2.0% ​0.4% ​37.9%
Middle East ​​13.2% 1.7% 7.8% ​-3.1% ​51.4%
North America 23.0% 3.1% 6.3​% ​-1.3% 43.2​%

Regional Performance

Three of the six regions reported year-on-year demand growth in November 2018 – North America, Middle East and Latin America. Asia Pacific, Europe and Africa all contracted. 

Asia-Pacific airlines saw demand for air freight shrink by 2.3% in November 2018, compared to the same period in 2017. This was the first time since May 2016 that monthly year-on-year demand declined. Weaker manufacturing conditions for exporters and shorter supplier delivery times particularly in China impacted the demand. Capacity increased by 3.1%.

North American airlines posted the fastest growth of any region for the second consecutive month in November 2018 with an increase in demand of 3.1% compared to the same period a year earlier. Capacity increased by 6.3%. The strength of the US economy and consumer spending have helped support the demand for air cargo over the past year, benefiting US carriers.

European airlines experienced a contraction in freight demand of -0.2% in November 2018 compared to the same period a year earlier. Capacity increased by 3.1% year-on-year. Weaker manufacturing conditions for exporters, and shorter supplier delivery times particularly in Germany, one of Europe’s key export markets, impacted demand.

Middle Eastern airlines’ freight volumes expanded 1.7% in November 2018 compared to the same period a year earlier. Capacity increased by 7.8% over the same period. Seasonally-adjusted international air cargo demand has now trended upwards for the past six months helped by stronger trade to/from Europe and Asia.

Latin American airlines’ freight demand rose 3.1% in November 2018 compared to the same period in 2017. Capacity increased by 2.0%. International year-to-date demand recovered into positive territory, increasing 6.3%. The key markets, however, to and from the region are showing signs of weakness, particularly between South America and Europe, which contracted in year-on-year terms in October (last data available).

African carriers saw freight demand decrease by 7.8% in November 2018, compared to the same month in 2017. This was the eighth time in nine months that demand contracted. Capacity shrank 7.4% year-on-year. Demand conditions on all key markets to and from Africa remain weak. Seasonally-adjusted international freight volumes are 7% lower than their peak in mid-2017, nonetheless, they are still 28% higher than their most recent trough in late-2015.  

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Solid But Moderating Passenger Demand In November

Total revenue passenger kilometers (RPKs) rose 6.2% compared to November 2017, a slight deceleration from 6.3% growth in October. Capacity (available seat kilometers or ASKs) increased by 6.8% over the year-ago period, and load factor dipped 0.4 percentage point to 80.0%. It was only the third time in two years that load factor fell on a year-to-year basis.

“Traffic is solid. But there are clear signs that growth is moderating in line with the slowing global economy. We still expect 6% demand growth this year. But trade tensions, protective tariffs and Brexit are all uncertainties that overhang the industry,” said Alexandre de Juniac, IATA’s Director General and CEO.

NOVEMBER 2018 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market 100.0% 6.2% 6.8% -0.4​% 80.0%
Africa 2.2% 2.2% 1.2% ​0.7% 69.8%
Asia Pacific 33.8% 6.3% 7.4% ​-0.8% ​80.2%
Europe 26.7​% 8.8% 8.8% ​0.0% 81.7%
Latin America 5.1% ​6.2% 6.0% ​0.1% ​82.0%
Middle East ​​9.4% 2.6% 5.2% ​-1.8% ​69.4%
North America 22.8% 5.1% 5.0% ​0.0% 83.6​%

International Passenger Markets

November international passenger demand rose 6.6% compared to the year earlier period, up from 6.2% in October. All regions showed growth, led by carriers in Europe. Total capacity climbed 6.7%, and load factor dipped 0.1 percentage point to 78.4%.

  • European carriers saw demand increase by 9.0% in November 2018, which was a nine-month high. Given the mixed signs on the economic backdrop in the region it is unclear whether this pace of growth can be sustained. Capacity climbed 9.1% and load factor slipped 0.1 percentage point to 82.1%, the highest load factor among the regions.
  • Asia-Pacific airlines’ November traffic climbed 6.0% compared to the year-ago period, up from 5.7% growth in October. Capacity also rose 6.0% and load factor was flat at 79.1%. Growth is underpinned by rising living standards and continuing expansion of options for travelers.
  • Middle East carriers had a 2.8% demand increase, which was the lowest among the regions for a third consecutive month. Capacity rose 5.6% and load factor slipped 1.9 percentage points to 69.0%.
  • North American airlines’ traffic climbed 6.1%, in November, up from 5.7% in October and well ahead of the five-year average rate of 4.0%. Capacity rose 3.8% and load factor edged up 1.7 percentage points to 80.6%. Demand is supported by comparatively strong momentum in the US economy.
  • Latin American airlines’ November traffic climbed 5.8% compared to November 2017, which was an increase from 5.2% growth recorded in October. Despite the increase, growth has slowed on a seasonally-adjusted basis. Capacity rose 6.6% and load factor slipped 0.6 percentage point to 80.6%.
  • African airlines experienced a 5.7% rise in demand compared to November 2017, down from 6.4% in October but higher than the five-year average of 5.8%. Growth is occurring despite challenges in the continent’s largest economies, Nigeria and South Africa. Capacity rose 3.9% and load factor climbed 1.2 percentage points to 68.9%.

Domestic Passenger Markets

Domestic travel demand rose 5.6% in November 2018 compared to the same month in 2017, its slowest pace in 11 months and down from 6.5% in October. All markets except Australia showed growth. Domestic capacity climbed 6.9%, and load factor dropped 1.0 percentage point to 82.8%.

NOVEMBER 2018 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic 35.9% 5.6% 6.9% -1.0​% 82.8%
Dom. Australia 0.9% -0.7% -1.1% ​0.3% 82.6%
Domestic Brazil 1.2% 5.3% 4.1% ​1.0% ​83.6%
Dom. China P.R. 9.1​% 7.2% 10.2% ​-2.3% 82.0%
Domestic India 1.4% ​13.3% 19.8% ​-4.8% ​84.4%
Domestic Japan ​​1.1% 1.5% 3.0% ​-1.1% ​75.6%
Dom. Russian Fed. 1.4% 13.8% 10.9% ​2.1% 81.6​%
Domestic US 14.3%​ 4.9%​ 5.9%​ -0.8%​ 85.2%​

 

  • India’s domestic traffic rose 13.3% in November compared to November 2017, marking the 51st consecutive month of double-digit domestic growth. However, it was also the slowest increase in 16 months.
  • Brazil’s domestic traffic rose to a four-month high of 5.3% in November, against a fragile economic backdrop.
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Transforming the Passenger Journey

The International Air Transport Association laid out a vision for air travel that will enable aviation to successfully accommodate a near doubling in demand for air travel over the next two decades. According to IATA’s latest passenger forecast, some 7.2 billion air trips will take place in 2035, up from 3.8 billion in 2016.

“My dream journey through the airport would offer security processes that are both effective and convenient, constant communication that makes me aware of changes to my journey or opportunities nearby, and a more efficient way of identifying myself to the airline, security staff and border management,” said Alexandre de Juniac, IATA’s Director General and CEO.

Speaking at the World Passenger Symposium in Dubai, de Juniac said that the roadmap to turn this dream into reality is being developed through IATA’s Simplifying the Business (StB) program. StB looks over the passenger experience from an end-to-end perspective across all processes, from shopping for travel, to the airport experience, to arriving at the destination, with a special focus on transformation. Programs under the StB umbrella include:

  • Smart Security, a joint initiative with Airports Council International (ACI) to make airport security checkpoints more efficient and less intrusive. It is making inroads in Europe and the first US airport—Hartsfield Atlanta International Airport—just joined the program. 
  • The New Distribution Capability (NDC), which will change how consumers shop for air travel by enabling travel agents to have access to products and services currently available only on airline websites owing to technology limitations. Already 26 airlines have implemented a part of the NDC standard.
  • ONE Order will build on the capabilities of NDC to enable airlines to replace the multiple rigid and paper-based booking and ticketing records by combining the contents into a single and flexible order record. It will eliminate the need for passengers to juggle different reference numbers and documents along their journeys.
  • Real-Time Interaction aims to provide customers with trusted, accurate real-time information from all travel service providers throughout their journey. 
  • One Identity is a visionary concept that would allow an air traveler to assert their identity just once, eliminating repetitive ID checks at security, border control and the gate.

De Juniac called for air transport stakeholders to work together and embrace speed and innovation to meet the challenges of growth and rising passenger expectations. “How do we move these concepts forward? The answer is in partnerships. Even as we implement today’s great ideas, we need to be looking for the next innovation that will make air travel even more compelling to the potential traveler. And we should be prepared to face a future where the cycle of innovation is continuously accelerating.”

De Juniac warned, however, that “no matter how much or how quickly we innovate our processes, there is no getting around the need to be both smart and quick in growing airport and airspace capacity.” He cited rising congestion, particularly in Europe, while noting that fast growing areas including the Gulf region and China also face airspace capacity issues. “I fear that we may be headed for an infrastructure crisis that will impact air travelers,” said de Juniac.

“Inadequate infrastructure negatively impacts the passenger experience in the form of flight delays, longer routes and inefficient schedules. Then there is the cost to economies of lost business opportunities, employment and social development. Remember aviation is a critical catalyst for economic and social development, supporting 63 million jobs and some $2.7 trillion in economic impact.”

De Juniac cited the recent historic agreement among member states of the International Civil Aviation Organization (ICAO) to enable aviation to grow sustainably as an example of what can be achieved by working together.

“Where we have common interests, we can produce results. With ICAO, the industry worked with governments to achieve the world’s first agreement to offset the environmental impact generated by the growth of an entire industrial sector. Along with our investments in more efficient technologies, infrastructure and operations, we will ensure that aviation grows sustainably as we prepare to meet our long-term commitment to cut net emissions to half of 2005 levels by 2050.”

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