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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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IATA And Organization For Security And Cooperation In Europe (OSCE) Secretariat Sign Mou To Enhance Aviation And Border Security

The International Air Transport Association (IATA) and the Secretariat of the Organization for Security and Cooperation in Europe (OSCE) signed a Memorandum of Understanding (MoU) to strengthen, promote, and develop cooperation on aviation facilitation and border integrity issues—two of the key components for governments to fulfill their national security responsibilities.

Under the MoU, IATA and OSCE have agreed to work on issues including harmonized passenger data exchange programs, border security, airport security and the security of travel documents (including issuance).

A particularly key issue for the aviation industry is aligning the requirements for Advance Passenger Information (API) with global standards, which include IATA and World Customs Organization guidelines, and the provisions of International Civil Aviation Organization (ICAO) Annex 9. IATA welcomes the OSCE’s co-operation among its 57 participating States on this increasingly important matter. The provision of more data on passengers to border control authorities in advance of arrival should also lead to more effective screening of passengers and reduced wait-times.

“Aviation security is a top priority for IATA and its members. With passenger numbers set to double over the next 20 years, it is essential that the global aviation security network is fit for purpose. IATA and OSCE are natural partners in the security facilitation and border integrity fields. We share the objective of achieving a more efficient and effective aviation security system,” said Alexandre de Juniac, IATA’s Director General and CEO.

“Our organizations enjoy excellent co-operation in the areas of aviation facilitation, national security and border integrity. The signing of this Memorandum marks another important milestone in further expanding and strengthening this co-operation. We are very pleased to join hands with IATA today to promote aviation security and facilitation measures in furthering the implementation of UN Security Council Resolutions 2178 on Foreign Terrorist Fighters, and 2309 on aviation security across the OSCE region,” said Lamberto Zannier, Secretary General of OSCE.

To ensure a close working relationship, OSCE and IATA have agreed to share information, consult each other on policy issues, participate in each other’s relevant committees, and work on joint training and technical assistance.

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VIDEO: Passenger Demand To Double Over 20 Years

But increased trade protectionism has potential to damage growth prospects.

The International Air Transport Association expects 7.2 billion passengers to travel in 2035, a near doubling of the 3.8 billion air travelers in 2016. The prediction is based on a 3.7% annual Compound Average Growth Rate (CAGR) noted in the release of the latest update to the association’s 20-Year Air Passenger Forecast.

“People want to fly. Demand for air travel over the next two decades is set to double. Enabling people and nations to trade, explore, and share the benefits of innovation and economic prosperity makes our world a better place,” said Alexandre de Juniac, IATA’s Director General and CEO.  

Eastward shift, developing market focus

The forecast for passenger growth confirms that the biggest driver of demand will be the Asia-Pacific region. It is expected to be the source of more than half the new passengers over the next 20 years. China will displace the US as the world’s largest aviation market (defined by traffic to, from and within the country) around 2024*.

India will displace the UK for third place in 2025*, while Indonesia enters the top ten at the expense of Italy. Growth will also increasingly be driven within developing markets. Over the past decade the developing world’s share of total passenger traffic has risen from 24% to nearly 40%, and this trend is set to continue.

Risks, Challenges and Opportunities

The 20-year forecast puts forward three scenarios. The central scenario foresees a doubling of passengers with a 3.7% annual CAGR. If trade liberalization gathers pace, demand could triple the 2015 level. Conversely, if the current trend towards trade protectionism gathers strength, growth could cool to 2.5% annual CAGR which would see passenger numbers reach 5.8 billion by 2035.

“Economic growth is the only durable solution for the world’s current economic woes. Yet we see governments raising barriers to trade rather than making it easier. If this continues in the long-term, it will mean slower growth and the world will be poorer for it. For aviation, the protectionist scenario could see growth slowing to as low as 2.5% annually. Not only will that mean fewer new aviation jobs, it will mean that instead of 7.2 billion travelers in 2035, we will have 5.8 billion. The economic impact of that will be broad and hard-felt,” said de Juniac. 

Whatever scenario is eventually realized, growth will put pressure on infrastructure that is already struggling to cope with demand.  “Runways, terminals, security and baggage systems, air traffic control, and a whole raft of other elements need to be expanded to be ready for the growing number of flyers. It cannot be done by the industry alone. Planning for change requires governments, communities and the industry working together in partnership,” said de Juniac.

The industry will also need to be able to grow sustainably. Earlier this month airlines supported the establishment of a Carbon Offset and Reduction Scheme for International Aviation (CORSIA). This landmark agreement—the first among governments to manage the emissions growth of an entire global industrial sector—aims to cap net emissions with carbon neutral growth from 2020. “Aviation is at the forefront of industries in managing its carbon footprint. Along with offsetting emissions through CORSIA, airlines are working with partners in industry and government to advance technology, improve operations and generate more efficiencies in infrastructure,” said de Juniac.

Key facts (all figures based on central growth forecast)

Fast-growing markets

The five fastest-growing markets in terms of additional passengers per year over the forecast period will be

  • China (817 million new passengers for a total of 1.3 billion)
  • US (484 million new passengers for a total of 1.1 billion)
  • India (322 million new passengers for a total of 442 million)
  • Indonesia (135 million new passengers for a total of 242 million)
  • Vietnam (112 million new passengers for a total of 150 million).

The top ten fastest-growing markets in percentage terms will be in Africa: Sierra Leone, Guinea, Central African Republic, Benin, Mali, Rwanda, Togo, Uganda, Zambia and Madagascar. Each of these markets is expected to grow by more than 8% each year on average over the next 20 years, doubling in size each decade.

Regional growth

  • Routes to, from and within Asia-Pacific will see an extra 1.8 billion annual passengers by 2035, for an overall market size of 3.1 billion. Its annual average growth rate of 4.7% will be the second-highest, behind the Middle East
  • The North American region will grow by 2.8% annually and in 2035 will carry a total of 1.3 billion passengers, an additional 536 million passengers per year
  • Europe will have the slowest growth rate, 2.5%, but will still add an additional 570 million passengers a year. The total market will be 1.5 billion passengers
  • Latin American markets will grow by 3.8%, serving a total of 658 million passengers, an additional 345 million passengers annually compared to today
  • The Middle East will grow strongly (4.8%*) and will see an extra 244* million passengers a year on routes to, from and within the region by 2035. The UAE, Qatar and Saudi Arabia will all enjoy strong growth of 5.9%*, 4.7%, and 4.1% respectively. The total market size will be 414 million passengers
  • Africa will grow by 5.1%. By 2035 it will see an extra 192 million passengers a year for a total market of 303 million passengers
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July Passenger Demand Shows Resilience

Global passenger traffic results for July show an acceleration in demand growth over the previous five months. Total revenue passenger kilometers (RPKs) rose 5.9%, compared to the same month last year, with all regions reporting growth. Monthly capacity (available seat kilometers or ASKs) increased by 6.0%, and load factor was 83.7%--just 0.1 percentage point below the record July high achieved in 2015.

“July saw demand strengthen, after a softening in June. Demand was stimulated by lower fares which, in turn, were supported by lower oil prices. And near record high load factors demonstrate that people want to travel. But, there are some important sub-plots to the narrative of strong demand. Long-haul travel to Europe, for example, suffered in the aftermath of a spate of terrorist attacks. And the mature domestic markets are seeing demand growth stall while Brazil and Russia contract,” said Alexandre de Juniac, IATA’s Director General and CEO.

Details of passenger market - July 2016

JULY 2016 (% YEAR-ON-YEAR)WORLD SHARE1RPKASKPLF (%-PT)​2PLF (LEVEL)​3
Total Market 100.0% 5.2% 5.6% -0.3​% 80.7%
Africa 2.2% 3.2% 5.9% ​-1.7% 65.0%
Asia Pacific 31.5% 9.0% 7.2% ​1.3% ​79.1%
Europe 26.7​% 2.0% 2.7% ​-0.6% ​82.9%
Latin America 5.4% ​4.6% 1.9% ​2.1% ​80.8%
Middle East ​​9.4% 7.3% 14.4% ​-4.6% ​70.3%
North America 24.7% 4.3% 4.3​% ​0.0% 86.3​%
(1)% of industry RPKs in 2015  (2)Year-on-year change in load factor  (3)Load factor level

International Passenger Markets

July international passenger demand rose 7.1% compared to July 2015, which was an increase over the 5.0% yearly increase in June. Airlines in all regions recorded growth. Total capacity climbed 7.3%, causing load factor to slip 0.2 percentage points to 83.5%.

  • Middle East carriers posted the strongest growth in July, with a 13.1% year-over-year increase; demand had dipped in June owing to the timing of Ramadan. Capacity rose 15.5%, causing load factor to drop 1.7 percentage points to 78.6%
  • Asia-Pacific airlines’ July traffic rose 9.8% compared to the year-ago period. Capacity increased 8.6% and load factor climbed 0.9 percentage points to 81.7%. Reports suggest that Asian passengers are putting off traveling to Europe in favor of regional trips owing to terrorism fears: while traffic on Asia-Europe routes fell by 0.9% in June, international traffic within Asia rose 8.1%, which was a four-month high
  • European carriers saw July demand increased by 4.1% compared to a year ago, which was the slowest among the regions. Demand has been affected by the recent terrorist attacks as well as political instability in parts of the region: traffic has grown at an annualized rate of just 1.4% since March. Capacity climbed 4.7% and load factor dipped 0.5 percentage points to 86.7%, which was still the highest among regions
  • North American airlines’ traffic climbed 4.8%, while capacity rose 5.1% with the result that load factor fell 0.3 percentage points to 86.1%. Seasonally adjusted volumes have risen at an annualized rate of more than 8% since March helped by transpacific and leisure traffic to Central America and the Caribbean
  • Latin American airlines’ demand rose 7.5% compared to July 2015 as the upward trend in traffic resumed following a soft patch in the first quarter of 2016. Capacity increased by 4.2%, boosting load factor 2.6 percentage points to 85.3%
  • African airlines experienced a 7.4% increase in traffic compared to a year ago but this relates mainly to the strong upward trend in seasonally-adjusted traffic during the second half of 2015. Capacity rose 5.9%, and load factor climbed 1.0 percentage point to 72.4%, lowest among regions.

Domestic Passenger Markets

Domestic travel demand climbed 3.8% in July compared to July 2015, its slowest pace in 19 months. China and India are booming while more mature markets are stuck in neutral, and Brazil and Russia are sliding backwards. Domestic capacity climbed 3.7%, and load factor rose 0.1 percentage point to 84.0%.

JULY 2016 (% YEAR-ON-YEAR)WORLD SHARE1RPK​​ASKPLF (%-PT)​2PLF (LEVEL)​3
Domestic 36.4% 3.8% 3.7% 0.1% 84.0%
Australia 1.1% 0.2% -1.6% ​1.5% 81.1%
Brazil 1.4% -6.8% -7.8% ​1.0% ​84.4%
China P.R. 8.4​% 10.2% 9.7% ​0.4% 82.1%
India 1.2% 26.2% 20.5% ​3.9% 84.5%
Japan ​​1.2% 0.9% -0.8% 1.1% 66.7%
Russian Federation 1.3% -3.2% -7.5% 3.8% ​87.3%
​US ​15.4% 1.6% 3.1%​ ​-1.3% 87.2​%
(1)% of industry RPKs in 2015  (2)Year-on-year change in load factor  (3)Load factor level
  • Brazil’s traffic decline reflects not only the country’s economic turmoil, but also the fact that, as airlines reduce services, options for travelers are being curtailed by fewer and less frequent air connections. August demand could see an uptick owing to the Olympics
  • Japan domestic traffic has trended sideways for the past 18 months in line with underlying weak momentum in consumer spending. However, service reductions and shifts to smaller aircraft helped push up load factor 1.1 percentage points to 66.7%, an all-time July high.

The Bottom line

“Passenger demand has broadly grown in line with the average of the past 10 years but the industry faces some potential headwinds, including lingering impacts from the series of terrorist attacks and the fragile economic backdrop. The environment in which aviation operates is dynamic—even volatile. Speed is of the essence. As an industry we must be prepared for rapid innovation in order to manage shocks and take advantage of opportunities as they arise,” said de Juniac.

International Expatriate and Business Travel News

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IATA Expresses Outrage At Brussels Attacks

The International Air Transport Association (IATA) expressed outrage at the attacks in Brussels and offered its sympathies to the victims and their families and friends.

“Innocent people have been senselessly murdered in an attack on our humanity. Our thoughts are with the victims, and their families and friends,” said Tony Tyler, IATA’s Director General and CEO.

The immediate priority is to help the injured, comfort the bereaved, and find the perpetrators. “Questions of airport security will surely arise. The safety and security of our passengers and employees is always top priority. The aviation industry will continue to work closely with governments as they fulfill their responsibility to protect their citizens from evil acts with well-thought-out and coordinated measures,” said Tyler.

“Aviation is a force for good. It brings the world together and fosters greater understanding of people and cultures. Those who commit terrorist acts know and fear this, and it is why air travel is so often a target. But terrorists will never succeed in destroying the fundamental urge and right of people to travel, explore and learn about the world. We stand united with the people of Brussels, where many of our own team live and work,” Tyler added.

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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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