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VIDEO: IATA Releases 2015 Safety Performance - No Fatal Jet Hull Losses

The 2015 global jet accident rate (measured in hull losses per 1 million flights) was 0.32, which was the equivalent of one major accident for every 3.1 million flights. This was not as good as the rate of 0.27 achieved in 2014 but a 30% improvement compared to the previous five-year rate (2010-2014) of 0.46 hull loss accidents per million jet flights.

There were four accidents resulting in passenger fatalities in 2015, all of which involved turboprop aircraft, with 136 fatalities. This compares with an average of 17.6 fatal accidents and 504 fatalities per year in the previous five-year period (2010-2014). The 2015 jet hull loss rate for members of IATA was 0.22 (one accident for every 4.5 million flights), which outperformed the global rate by 31% and which was in line with the five-year rate (2010-2014) of 0.21 per million flights but above the 0.12 hull loss rate achieved in 2014.

The loss of Germanwings 9525 (pilot suicide) and Metrojet 9268 (suspected terrorism) that resulted in the deaths of 374 passengers and crew are tragedies that occurred in 2015. They are not, however, included in the accident statistics as they are classified as deliberate acts of unlawful interference (i).

“2015 was another year of contrasts when it comes to aviation’s safety performance. In terms of the number of fatal accidents, it was an extraordinarily safe year. And the long-term trend data show us that flying is getting even safer. Yet we were all shocked and horrified by two deliberate acts--the destruction of Germanwings 9525 and Metrojet 9268. While there are no easy solutions to the mental health and security issues that were exposed in these tragedies, aviation continues to work to minimize the risk that such events will happen again,” said Tony Tyler, IATA’s Director General and CEO. 

2015 Safety by the numbers: 

    • More than 3.5 billion people flew safely on 37.6 million flights (31.4 million by jet, 6.2 million by turboprop)
    • 136 fatalities compared to 641 fatalities in 2014 and the five-year average of 504. Including those who lost their lives in Germanwings 9525 and Metrojet 9268, the 2015 figure was 510.
    • 68 accidents (all aircraft types), down from 77 in 2014 and the five-year average of 90 per year
    • Four fatal accidents (all aircraft types) versus 12 in 2014 and the five-year average of 17.6
    • 6% of all accidents were fatal, below the five-year average of 19.6%
    • 10 hull loss accidents involving jets compared to 8 in 2014 and the five-year average of 13 per year
    • Zero jet hull loss accidents involving passenger fatalities, down from three in 2014, and the five-year average of 6.4 per year.
    • Although there were no passenger fatalities on jet transports there were two accidents with jet aircraft which resulted in loss of life:

1. Eight fatalities on the ground resulted from a runway excursion in the DR Congo involving a freighter aircraft.
2. A passenger jet and a smaller jet conducting an air ambulance flight collided over Senegal. Damage to the passenger jet was moderate and there were no injuries to any on board. The wreckage of the air ambulance has not been located and is presumed lost with the deaths of all 7 persons on board.

  • Eight hull loss accidents involving turboprops of which four were fatal
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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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Stand-Alone Travel Insurance and Assistance Gross Written Premiums Forecast To Rise To 4.54 Billion Euros By 2018 Across 20 European Countries

Munich Re and Allianz are the market-leading groups in a fragmented market that is predicted to be worth EUR 4.54 billion by 2018.

The value of the market for stand-alone travel insurance and assistance across 20 European countries was EUR 3.86 billion in 2014 in terms of gross written premiums and is forecast to rise to EUR 4.54 billion by 2018. The UK market is by far the most valuable as it was worth more than twice as much in 2014 as Germany, the next-largest country.

However, in terms of travel insurance and assistance gross written premiums per capita, Norway can be identified as Europe's most developed market albeit Poland's has displayed the most rapid growth in real terms (i.e. after discounting for inflation). These are key findings from Finaccord's new study titled Travel Insurance and Assistance in Europe which investigates the market for stand-alone travel insurance and assistance in 20 European countries.

"At 29.3% of the total market value in 2014, the UK alone accounted for almost a third of the European market for travel cover", commented David Bowles, Consultant at Finaccord. "Reasons for this include the outright size of the UK population plus the fact that it scores relatively highly in three further areas: the frequency with which its residents travel abroad, the propensity that they show to take out travel insurance, and average policy prices. All but the last of these factors also apply to Germany but the market value there is reduced by the fact that the average price of a travel insurance policy is less than one third of that of the UK. This is because many of the policies bought by German travellers offer much less comprehensive cover."

In terms of the growth of the value of their markets for travel insurance and assistance, Poland, Norway, Romania and Turkey have been growing most rapidly with compound annual growth rates of gross written premiums of 9.0%, 7.2%, 6.6% and 5.4%, respectively, between 2010 and 2014 when expressed in real terms (i.e. after discounting inflation). In contrast, the weakest performances came from the Czech Republic, Italy, Spain and the Netherlands where the value of travel cover fell in real terms in all cases (at respective compound annual rates of decline of 4.5%, 4.3%, 2.0% and 1.8%). Meanwhile, the large UK market edged up at an almost-imperceptible real compound annual rate of growth of just 0.1% over the same time frame.

"The fact that Norway's market is ranked second for growth out of 20 countries is somewhat surprising given that Norwegian travellers already pay a vastly higher price for travel cover than their counterparts elsewhere in Europe", continued David Bowles. "However, the number of policies sold there has also been increasing quite rapidly as a result of increasing outbound travel so the growth in market value cannot be attributed purely to rising prices."

On the basis of its research, Finaccord has also computed approximate market shares of the leading underwriters of stand-alone travel insurance not only in each of the 20 countries reviewed but also across them combined. This combined analysis indicates that Munich Re, mainly via subsidiary ERV (Europäische Reiseversicherung), and Allianz, primarily through assistance arm Allianz Global Assistance, are likely to be the market-leading groups with Europe-wide shares of gross written premiums of between 11% and 15% in the former case, and between 10% and 14% in the latter case. However, the fairly fragmented state of this sector is illustrated by the fact that groups outside of the top 15 (numbering more than 260 in total) may well command between 28% and 38% of the total market value.

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Timing of Lunar New Year and US Port Congestion Boosts February Air Freight

Data for global air freight markets showing a sharp increase in year-on-year air freight volumes. Growth measured by freight tonne kilometers (FTK) was up 11.7% in February, compared to February 2014. Capacity grew 7.4%.

Much of the impressive February result is due to the timing of the Lunar New Year activities. Air freight is given a strong boost in the weeks leading up to the holiday, which last year fell in January. In addition, air freight volumes were enhanced by the consequences of congestion at US West Coast ports.

These factors showed up most in the Asia-Pacific results, with carriers in that region recording a rise in volumes of 20.8% year-on-year. Japanese carriers, in particular, benefited from the modal shift owing to congested sea ports in the US.

“A combination of factors made February the strongest month in a very long time for air freight. Nobody expects growth to continue at this pace. As we look forward, however, there is room for optimism. Business confidence improved slightly and trade continues to grow. The year is shaping up in line with a growth expectation of 4-5%,” said Tony Tyler, IATA’s Director General and CEO.

Feb 2015 vs. Feb 2014FTK GrowthAFTK GrowthFLF
International 12.7% 8.9% 50.5
Domestic 5.5% 1.4% 30.2
Total Market 11.7% 7.4% 46.5

 

YTD 2015 vs. YTD 2014FTK GrowthAFTK GrowthFLF
International 8.2% 7.1% 48.1
Domestic 2.9% 0.6% 30.2
Total Market 7.5% 5.7% 44.6

Regional analysis in detail

Asia-Pacific carriers saw FTKs grow 20.8% responding to strong demand ahead of the Lunar New Year. There is also evidence that significant automotive exports from Japan to the US shifted from sea to air. In general Japanese trade is enjoying a positive growth spurt, but emerging Asia and Chinese trade activity appears to be easing slightly. Capacity grew 12.7%.   

European airlines reported a 1.1% rise in FTKs. The European economy remains in the doldrums, and the effects of the Russian sanctions and the region’s recession continue to dampen demand. There is some sign of improvement in manufacturing output, which could lead to stronger air cargo growth in the months to come. Capacity grew 2.4%.    

North American carriers grew 8.7% year-on-year. The region’s airlines also benefitted from the congestion at US West Coast ports. The fundamentals of the US economy show employment, consumer and business confidence all improving, which should underpin volume growth even after the ports issue is resolved. Capacity grew 0.7%.     

Middle Eastern carriers expanded FTKs by 17.6%. The region’s carriers continue to benefit from their strong geographic base, and have further gained by expanding their networks and encouraging freight to transit through their hubs. Capacity grew 19.2%.    

Latin American airlines’ air freight volumes sharply declined by 9.6% in February. Although regional trade activity has increased in recent months, this has not offset the struggles of the Brazilian and Argentinian economies. Capacity grew 1.9%. 

African airlines reported 8.3% growth in FTKs in February. In Africa, the regional trade growth has counterbalanced the weakness in the Nigerian and South African economies. Capacity grew 3.8%.     

The bottom line

“The prospect of strengthening air freight growth in 2015 gives an added incentive to the air cargo industry to invest in new procedures and facilities. At the World Cargo Symposium in Shanghai, held in March, the discussions centered on improving the customer experience. Shippers are demanding better and more specialized services. The industry is responding with initiatives including accelerating the implementation of paperless processes, benchmarking cool-chain facilities, and tackling the challenge of illegal lithium battery shipments,” said Tyler.

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Robust Air Passenger Growth in June

The International Air Transport Association (IATA) released June passenger demand figures showing year-on-year growth of 6.0%. The robust growth, measured in revenue passenger kilometers (RPK), is ahead of the 4.8% demand growth reported over the first six months of 2013 compared to the same period in 2012. It is also ahead of the 5.6% expansion in capacity for June over the previous year. This pushed the passenger load factor to 81.7%. While the strong growth trend was reflected in all regions it should be noted that Asia-Pacific airlines were responsible for half of the increase in RPKs from May to June.

Due to the volatility of Asia-Pacific performance it is too early to say if this acceleration marks a trend for the rest of the year. European airlines were another highlight of the month. They reported a second consecutive month of solid growth (4.8%) reflecting an easing in recessionary conditions in the Eurozone and an improvement in business and consumer confidence. And emerging markets were once again the strongest performers, particularly Africa (10.8%) and the Middle East (11.0%).

“June was a positive month for passenger markets. The stability in the Eurozone, albeit tentative, is giving a boost to business and consumer confidence. And the load factor at 81.7% shows that airlines are efficiently meeting increasing demand for travel. But there are some headwinds. Growth in the BRICS economies, including China, is slowing. And oil prices remain high. The industry is still on track to make $4.00 per passenger this year for a global net profit of $12.7 billion. But there is little margin for error and even a small change in the second half of the year could shift the outlook significantly,” said Tony Tyler, IATA’s Director General and CEO.

International air travel expanded strongly, up by 5.9% in June compared to a year ago. June capacity grew in line with this (5.7%) resulting in a June international load factor of 81.4%.

European carriers recorded 4.7% growth over the previous June. Capacity increased by 3.4% pushing load factors to 83.2%. Asia-Pacific carriers grew by 5.5% on international routes, slightly behind the 6.7% growth in capacity. The load factor stood at 79.0%, the lowest among the major regions. Slower than expected economic growth in China during the first half of 2013 coupled with a decline in both trade and export orders are negatively impacting travel across the region.

Nonetheless, Asia Pacific carriers did account for nearly half of the May to June growth in RPKs. North American airlines grew 3.4% in June year-on-year, ahead of the 3.0% growth in capacity. As a result of continued tight capacity management, the region recorded the highest load factor (87.4%). The June performance was a break from the basically sideways growth of just 1.9% over the first half of the year. It is unlikely that June will mark the start of a step change in the growth trend.

Middle East carriers expanded 12.1% compared to a year ago. This was slightly below the 13.4% capacity expansion resulting in a load factor of 78.4%. The demand for new routes to emerging markets in Africa and Asia has fuelled the growth of the Gulf hubs. Latin American airlines recorded growth of 8.7% in June, ahead of the 7.7% capacity growth.

The region’s load factor stood at 79.2%. The June performance was boosted by strong business-related demand, as the region posted the strongest trade growth of any region in the second quarter. African airlines benefitted from strong domestic economic growth in key markets such as Ghana, Nigeria, Ethiopia and the Democratic Republic of Congo, to post growth of 11.2%.

Although African airlines’ load factors (70.7%) still lag the global average by around ten percentage points, they have made consistent progress to close the gap this year, and in June, improved their load factor by almost three percentage points compared to June 2012. Total domestic air travel performed strongly in June, with growth of 6.1% compared to June 2012, and growth in all major markets. Domestic capacity expanded by 5.2% leading to a load factor of 82.0%.

The United States saw domestic growth of 2.4% in June. This weak growth reflects a combination of capacity management, a mature market, and the slowdown in the US economy in Q2.

North American carriers posted the highest domestic load factor at 87.1%. The Chinese domestic market grew 14.6% in June and the load factor stood at 81.5%. This robust performance came despite a reported slowdown in the Chinese economy in recent months. Declining manufacturing employment may put pressure on demand in the months to come.

Brazilian domestic travel was up 3.2% compared to June 2012. This is positive news in a market that is struggling with a 0.6% contraction over the first half of the year and the likelihood of continued economic weakness. Load factors have been a bright spot however, reaching 77.4% in June as airlines tightly control capacity.

The Indian domestic market grew 7.7% in June year-on-year, well ahead of a capacity expansion of 2.6%. Load factors reached 81.5%. Reductions in domestic fares may be leading to increased demand, but it is difficult to discern the true strength of the Indian market due to the volatility of month-to-month traffic. Russia posted the second-strongest domestic growth rate in June, up 9.8% on a year ago.

The outlook for the rest of the year looks positive as the Russian economy looks poised to pick up. Japan’s domestic market showed a solid rise of 6.9%, reflecting strong momentum in the country’s economy. A milestone was passed, as Japan’s air travel market recovered to pre-tsunami levels. Load factors of 59.5% however, indicate the continuing challenges in the market.

“The half-year report for passenger markets is broadly positive. There is plenty of evidence to support some cautious optimism. Airlines are expecting continued growth in demand, but there is little immediate hope for an improvement in yields. In the short term, cost control remains high on every airline’s agenda. And the longer-term challenge is to expand value streams to generate sustainable levels of profitability,” said Tyler. The July IATA Airline Business Confidence index reported that 61.5% of respondents expect an improvement in demand. But only half (30.8%) expect any improvement in yields over the next 12 months.

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