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Passenger Revenues Could Plummet $252 Billion Below 2019’s Figure

Owing to the severity of travel restrictions and the expected global recession, IATA now estimates that industry passenger revenues could plummet $252 billion or 44% below 2019’s figure. This is in a scenario in which severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year.

IATA’s previous analysis of up to a $113 billion revenue loss was made on 5 March 2020, before the countries around the world introduced sweeping travel restrictions that largely eliminated the international air travel market.

“The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates. But without immediate government relief measures, there will not be an industry left standing. Airlines need $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,” said IATA’s Director General and CEO, Alexandre de Juniac.

Slower Recovery

The latest analysis envisions that under this scenario, severe restrictions on travel are lifted after 3 months. The recovery in travel demand later this year is weakened by the impact of global recession on jobs and confidence. Full year passenger demand (revenue passenger kilometers or RPKs) declines 38% compared to 2019. Industry capacity (available seat kilometer or ASKs) in domestic and international markets declines 65% during the second quarter ended 30 June compared to a year-ago period, but in this scenario recovers to a 10% decline in the fourth quarter.

REGION OF AIRLINE REGISTRATION

% CHANGE IN RPKS
(2020 VS. 2019)

EST. IMPACT ON PASS. REVENUE
2020 VS. 2019
(US$ BILLIONS)

Africa
-32%
-4
Asia Pacific
-37%
-88
Europe
-46%
-76
Latin America
-41%
-15
Middle East
-39%
-19
North America
-27%
-50
Industry
-38%
-252

Read Alexandre de Juniac's speech

Check the COVID-19: Updated Impact Assessment (pdf), 24 March 2020

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COVID-19 Hits January Passenger Demand

Global passenger traffic data for January 2020 showing that demand (measured in total revenue passenger kilometers or RPKs) climbed 2.4% compared to January 2019. This was down from 4.6% year-over-year growth for the prior month and is the lowest monthly increase since April 2010, at the time of the volcanic ash cloud crisis in Europe that led to massive airspace closures and flight cancellations.

January capacity (available seat kilometers or ASKs) increased by 1.7%. Load factor climbed 0.6 percentage point to 80.3%.

“January was just the tip of the iceberg in terms of the traffic impacts we are seeing owing to the COVID-19 outbreak, given that major travel restrictions in China did not begin until 23 January. Nevertheless, it was still enough to cause our slowest traffic growth in nearly a decade,” said Alexandre de Juniac, IATA’s Director General and CEO.

JANUARY 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100.0%
2.4%
1.7%
0.6%
80.3%
Africa
2.1%
5.2%
6.1%
-0.6%
70.2%
Asia Pacific
34.7%
0.4%
2.2%
-1.5%
79.9%
Europe
26.8%
1.6%
-0.5%
1.7%
81.6%
Latin America
5.1%
0.4%
0.0%
0.3%
82.6%
Middle East
9.0%
5.9%
0.6%
3.9%
78.5%
North America
22.2%
5.7%
3.6%
1.6%
81.2%

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

International Passenger Markets

January international passenger demand rose 2.5% compared to January 2019, down from 3.7% growth the previous month. With the exception of Latin America, all regions recorded increases, led by airlines in Africa and the Middle East that saw minimal impact from the COVID-19 outbreak in January. Capacity climbed 0.9%, and load factor rose 1.2 percentage points to 81.1%.

Asia-Pacific airlines’ January traffic climbed 2.5% compared to the year-ago period, which was the slowest outcome since early 2013 and a decline from the 3.9% increase in December. Softer GDP growth in several of the region’s key economies was compounded by COVID-19 impacts on the international China market. Capacity rose 3.0% and load factor slid 0.4 percentage point to 81.6%.

European carriers saw January demand climb just 1.6% year-to-year, down from 2.7% in December. Results were impacted by slumping GDP growth in leading economies during the 2019 fourth quarter plus flight cancellations related to COVID-19 in late January. Capacity fell 1.0%, and load factor lifted 2.1 percentage points to 82.7%.

Middle Eastern airlines posted a 5.4% traffic increase in January, the fourth consecutive month of solid demand growth, reflecting strong performance from larger Europe-Middle East and Middle East-Asia routes, which were not significantly impacted by route cancellations related to COVID-19 at that time. Capacity increased just 0.5%, with load factor jumping 3.6 percentage points to 78.3%. 

North American carriers’ international demand rose 2.9% compared to January a year ago, which represented a slowdown from the 5.2% growth recorded in December, although there were no significant flight cancellations to Asia in January. Capacity climbed 1.6%, and load factor grew by 1.0 percentage point to 81.7%.

Latin American airlines experienced a 3.7% demand drop in January compared to the same month last year, which was a further deterioration compared to a 1.3% decline in December. Traffic for Latin American carriers has now been particularly weak for four consecutive months, reflecting continued social unrest and economic difficulties in a number of countries in the region unrelated to COVID-19. Capacity fell 4.0% and load factor edged up 0.2 percentage point to 82.7%.

African airlines’ traffic climbed 5.3% in January, up slightly from 5.1% growth in December. Capacity rose 5.7%, however, and load factor slipped 0.3 percentage point to 70.5%.

Domestic Passenger Markets

Demand for domestic travel climbed 2.3% in January compared to January 2019, as strong growth in the US helped mitigate the impact from a steep decline in China’s domestic traffic. Capacity rose 3.0% and load factor dipped 0.5 percentage point to 78.9%.

JANUARY 2020 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
36.2%
2.3%
3.0%
-0.5%
78.9%
Dom. Australia
0.8%
0.1%
-1.4%
1.2%
79.3%
Domestic Brazil
1.1%
2.1%
0.1%
1.6%
85.7%
Dom. China P. R.
9.8%
-6.8%
-0.2%
-5.4%
76.7%
Domestic India
1.6%
2.5%
2.3%
0.1%
86.1%
Domestic Japan
1.1%
3.8%
1.9%
1.3%
68.1%
Dom. Russia. Fed.
1.5%
3.9%
8.3%
-3.1%
72.2%
Domestic US
14.0%
7.5%
4.9%
1.9%
81.1%

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

Chinese airlines’ domestic traffic fell 6.8% in January, reflecting the impact of flight cancellations and travel restrictions related to COVID-19. China’s Ministry of Transport reported an 80% annual fall in volumes in late January and early February. Capacity slipped 0.2% and passenger load factor plunged 5.4 percentage points to 76.7%.

US airlines saw domestic traffic climb 7.5% in January. Although this was down from 10.1% growth in December, it represented another strong month of demand growth reflecting supportive business confidence and domestic economic outcomes at the time. Capacity rose 4.9% and load factor climbed 1.9 percentage points to 81.1%.

The Bottom Line

“The COVID-19 outbreak is a global crisis that is testing the resilience not only of the airline industry but of the global economy. Airlines are experiencing double-digit declines in demand, and on many routes traffic has collapsed. Aircraft are being parked and employees are being asked to take unpaid leave. In this emergency, governments need to consider the maintenance of air transport links in their response. Suspension of the 80/20 slot use rule, and relief on airport fees at airports where demand has disappeared are two important steps that can help ensure that airlines are positioned to provide support during the crisis and eventually in the recovery,” said de Juniac.

 

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Stable Passenger Demand Growth November 2019

Global passenger traffic results for November 2019 show that demand (measured in revenue passenger kilometers or RPKs) rose 3.3% compared to the same month in 2018.

This was unchanged from October’s result and below the long-term trend. Capacity (available seat kilometers or ASKs) increased by 1.8%, and load factor climbed 1.1 percentage points to 81.1%, which was a record for any November. All regions saw annual increases in traffic.

“November’s moderate result reflects the continuing influence of slower economic activity, geopolitical tensions and other disruptions, including strikes in Europe. On the plus side, positive developments in the US-China trade talks, in tandem with signs of improving business confidence, could support an uptick in travel demand. In the meantime, continued modest capacity growth is helping to maximize asset efficiency,” said Alexandre de Juniac, IATA’s Director General and CEO.

 NOVEMBER 2019 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market
100.0%
3.3%
1.8%
1.1%
81.1%
Africa
2.1%
3.5%
2.5%
0.6%
70.8%
Asia Pacific
34.5%
4.4%
3.2%
1.0%
81.3%
Europe
26.8%
1.3%
-0.7%
1.6%
83.3%
Latin America
5.1%
2.0%
2.0%
0.0%
82.2%
Middle East
9.2%
7.2%
-0.1%
5.0%
73.2%
North America
22.3%
2.3%
3.4%
-0.9%
82.8%

1- % of industry FTKs in 2018 2- Year-on-year change in load factor 3-Load factor level

International Passenger Markets

November international passenger demand rose 3.1%, compared to November 2018, which was a marginal increase from the 3.0% year-over-year growth achieved in October. All regions recorded traffic increases, except for Latin America. Capacity climbed 0.7%, and load factor increased 1.8 percentage points to 80.1%.

Asia-Pacific airlines saw November traffic increase 3.9% compared to the 2018 period, a slight decline compared to the 4.2% annual growth recorded in October. Capacity rose 2.8% and load factor rose 0.8 percentage point to 79.9%. While seasonally-adjusted volumes are increasing, the trend has moderated. Disruptions in Hong Kong, slowing demand in India and China and less supportive business confidence in several key economies are among the contributing factors.

European carriers experienced a 1.2% increase in November traffic, down from 1.6% growth in October and the weakest outcome since early 2013. Industrial actions (strikes) disrupted operations for a number of airlines during the month, contributing to the demand slowdown. Capacity dropped 1.1% and load factor rose 1.8 percentage points to 83.8%.

Middle Eastern airlines posted a 7.4% traffic increase in November, up from a 5.6% rise in October. Capacity was flat, and load factor soared 5.0 percentage points to 73.2%. The strong performance was driven by robust demand on to/from Asia and Europe markets.

North American carriers’ international demand climbed 2.3% compared to November 2018, down from the 3.6% growth recorded in October. Despite a slowing in economic activity, fundamentals remain generally sound for the region, although the rise in geopolitical tensions may impact international demand going forward. Capacity rose 1.6%, and load factor accelerated 0.6 percentage point to 81.2%.

Latin American airlines had a 0.3% traffic decline in November compared to a year ago, in line with October’s decline. Capacity slipped 1.8% and load factor increased 1.3 percentage points to 82.1%. Economic headwinds and/or social unrest in a number of countries in the region contributed to the lowered result.

African airlines’ traffic climbed 4.9% in November, up from 2.3% growth recorded in October. Challenges in the South Africa market have been more than offset by strong performance elsewhere in the region. Capacity rose 2.8%, and load factor climbed 1.4 percentage points to 70.3%.

Domestic Passenger Markets

Demand for domestic travel climbed 3.5% in November compared to November 2018, which was a marginal decline from 3.7% annual growth recorded in October. Capacity rose 3.8% and load factor slipped 0.2 percentage point to 82.8%.

 NOVEMBER 2019 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic
36.1%
3.5%
3.8%
-0.2%
82.8%
Dom. Australia
0.9%
1.1%
0.2%
0.8%
83.2%
Domestic Brazil
1.1%
1.4%
2.5%
-0.9%
82.7%
Dom. China P.R
9.5%
5.3%
4.7%
0.5%
83.2%
Domestic India
1.6%
11.3%
5.0%
5.1%
89.4%
Domestic Japan
1.1%
3.7%
2.2%
1.1%
78.7%
Dom. Russian Fed.
1.5%
2.4%
4.7%
-1.8%
80.0%
Domestic US
14.0%
2.4%
4.4%
-1.6%
83.7%

1- % of industry FTKs in 2018 2- Year-on-year change in load factor 3-Load factor level

Indian airlines experienced a return to double-digit growth for the first time since January 2019, as traffic rose 11.3% compared to November 2018. However, economic growth in the third quarter was the weakest in around six years amid a broad-based slowdown that is affecting many sectors of the economy. This will present a more challenging environment for the industry going forward. 

Japan’s airlines saw domestic traffic climb 3.7% in November, more than double the 1.8% increase recorded in October. While growth has been volatile over the past six months or so, the bigger picture is that seasonally-adjusted volumes are trending modestly upward.

 

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How To Submit News, Articles and Case Studies To iPMI Magazine

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Using the latest technology iPMI Magazine can deliver critical business communications to an eclectic worldwide readership from international medical payor to provider. 

News classifications include:

Write to ipmi[at]ipmimagazine.com to learn more or to submit content. 

About iPMI Magazine

Due to the nomadic nature of the international private medical insurance (IPMI) industry, iPMI Magazine is an internet based news service for worldwide insurance and assistance professionals who need to understand the impacts of insurance and healthcare policy, regulatory, and legislative developments. Over 40,000 senior level business decision makers, in over 120 countries, rely on iPMI Magazine to stay 1 step ahead of the risk and on the inside track of international PMI. Covering business travellers, high net worth individuals, expatriate and leisure travel markets, iPMI Magazine is the only international news source covering the most exciting sector of international health insurance: international private medical insurance.

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Healthy Passenger Demand Continues in 2018 With Another Record Load Factor

Global passenger traffic results for 2018 show that demand (revenue passenger kilometers or RPKs) rose by a healthy 6.5% compared to full-year 2017. Although this represented a slowdown compared to the 2017 annual growth of 8.0%, it was another year of above-trend growth. Full year 2018 capacity climbed 6.1%, and load factor edged up 0.3 percentage point to a record 81.9%, exceeding the previous high set in 2017.

December RPKs rose 5.3% against the same month in 2017, the slowest year-over-year pace since January 2018 and a continuation of the trend that saw demand growth decelerate to an annualized rate of 5% over the course of the 2018 second half compared to a 9% pace in the first half.

“2018 was another year of strong passenger demand, as aviation continued to support the global economy. We expect similar, if somewhat moderating performance in 2019. Nevertheless, slowing growth in the second half of 2018, coupled with concerns over issues including Brexit and US-China trade tensions, are creating some uncertainty to this positive outlook,” said Alexandre de Juniac, IATA’s Director General and CEO.  

DECEMBER 2018 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Total Market 100.0% 5.3% 6.1% -0.6​% 80.4%
Africa 2.1% 2.1% 1.6% ​0.4% 72.4%
Asia Pacific 34.5% 6.4% 6.7% ​-0.2% ​81.0%
Europe 26.7​% 7.8% 8.8% ​-0.8% 81.0%
Latin America 5.1% ​6.0% 5.4% ​0.4% ​81.8%
Middle East ​​9.2% 0.0% 4.2% ​-3.1% ​73.6%
North America 22.4% 3.6% 4.0​% ​-0.3% 82.5​%

International Passenger Markets

International passenger traffic in 2018 climbed 6.3% compared to 2017, down from 8.6% annual growth the year before. Capacity rose 5.7% and load factor climbed by 0.4 percentage point to 81.2%. All regions recorded year-over-year increases in traffic, led by Asia-Pacific. However, North America and Africa were the only two regions to post stronger demand growth in 2018 compared to the prior year’s performance

  • Asia-Pacific airlines’ 2018 traffic rose 7.3%, compared to 2017, driven by robust regional economic expansion and an increase in route options for travelers. Although this was a slowdown from the 10.5% year-over-year growth recorded in 2017 versus 2016, it was strong enough to lead all the regions for a second consecutive year. Capacity rose 6.4%, and load factor ticked up 0.7 percentage point to 80.6%.
  • European carriers’ international traffic climbed 6.6% in 2018 compared to the previous year, which was down from 9.4% growth the year before. Capacity rose 5.9% and load factor increased 0.6 percentage point to 85.0%, which was the highest for any region. On a seasonally-adjusted basis, traffic growth has softened a bit in recent months, likely owing, in part, to uncertainty over the economic backdrop and Brexit.
  • Middle East carriers’ traffic increased 4.2% last year, down from 6.9% growth in 2017. It was the second year in a row of moderating demand growth. Capacity climbed 5.2% and load factor slipped 0.7 percentage point to 74.7%. The deceleration in growth reflects the impact of policy measures and geopolitical tensions, including travel restrictions and the temporary ban on large portable electronic devices. Traffic actually declined 0.1% year-on-year in December, but this may reflect volatility in data.
  • North American airlines had their fastest demand growth since 2011, with full-year traffic rising 5.0% compared to 2017, an increase from 4.7% annual growth in 2017. Here too, however, demand growth slackened noticeably in the last two quarters. This may be owing to increasing concerns over the US economic outlook and trade tensions with China. Capacity climbed 3.7%, and load factor edged up 1.0 percentage point to 82.6%, second highest among the regions. 
  • Latin American airlines’ traffic climbed 6.9% in 2018, a slowdown compared to 8.8% annual growth in 2017. Capacity rose 7.7% and load factor dipped 0.6 percentage point to 81.8%. Traffic was affected by the mid-year general strikes in Brazil as well as by political and economic developments in some of the region’s other key economies.
  • African airlines saw 2018 traffic rise 6.5% compared to 2017, which was an increase compared to 6.0% annual growth in 2017. The strong performance took place in spite of the mixed economic backdrop of the continent’s largest economies, Nigeria and South Africa. Capacity rose 4.4%, and load factor jumped 1.4 percentage points to 71.0%. 

Domestic Passenger Markets

Domestic air travel climbed 7.0% last year, which was unchanged from the rate in 2017. All markets showed annual growth, led by India and China, which both posted double-digit annual increases. Capacity rose 6.8% and load factor was 83.0%, up 0.2% percentage point compared to 2017. 

DECEMBER 2018 (% YEAR-ON-YEAR) WORLD SHARE1 RPK ASK PLF (%-PT)​2 PLF (LEVEL)​3
Domestic 36.0% 5.0% 6.3% -0.9​% 81.2%
Dom. Australia 0.9% -1.8% -0.8% ​-0.8% 80.5%
Domestic Brazil 1.1% 3.4% 2.3% ​0.9% ​84.3%
Dom. China P.R. 9.5​% 7.3% 9.8% ​-1.9% 80.8%
Domestic India 1.6% ​10.0% 16.5% ​-5.0% ​84.5%
Domestic Japan ​​1.0% 4.7% 1.9% ​1.8% ​68.8%
Dom. Russian Fed 1.4% 11.4% 11.6​% ​-0.1% 78.8​%
Domestic US 14.1%​ 3.8%​ 4.9%​ -0.9%​ 82.8%​
  • India’s domestic market posted the fastest full-year domestic growth rate for the fourth consecutive year, with an 18.6% annual demand increase. Domestic demand is underpinned by robust economic expansion and increasing numbers of city pairs.
  • Australia represented the opposite picture, as annual traffic rose just 1.4%, although this was a slight increase over the rate of 2017.

The Bottom Line:

“Aviation continued to demonstrate why it is the Business of Freedom in 2018. We safely transported more than 4.3 billion passengers. These people used air connectivity to conduct trade and business, reunite with friends and loved ones, explore the world, and, in some cases even to begin new lives. Aviation makes the modern world possible, but we depend on borders that are open to people and trade to be effective. In 2019, we will be strong advocates against a rising tide of protectionism and trade conflict, so that the Business of Freedom can continue to do its part to make the world a more prosperous and happier place,” said de Juniac.

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Europe The Number 1 Destination People Wish To Visit In 2019

More than two-fifths (45%) of people say the sustainability credentials of their travel provider are important when booking a holiday this year – which has almost doubled over the last four years (24% in 2014)1.

The findings are published as part of ABTA’s Travel Trends 2019 report, which highlights that responsible tourism is now becoming an increasingly significant consideration when booking a holiday.

Travel Trends 2019 is based on market information and consumer insights, revealing five key trends expected to shape holiday choices in 2019 and highlighting ABTA’s “12 destinations to watch”. It also identifies that, despite political uncertainty, people are committed to taking holidays and the desire to get a value-for-money break is also expected to influence holiday decisions over the next 12 months.

Responsible tourism goes mainstream

This past year has seen a number of sustainability issues move further into the public's consciousness - with much greater awareness of the impact of plastics on the environment on tourism’s impact on local communities.

The uplift in awareness is also reflected in holidaymakers attitudes to companies – over a third (36%) of people would opt for one travel business over another if they have a better environmental record –  up 13% since 2014 (23%)2.

Responsible tourism has risen further up the agenda and is becoming an integral part of business decisions and planning, with many companies announcing plans to make holidays more sustainable in the long term.

Examples include TUI, Intrepid and G Adventures, who have recently announced plans to further support the local economy and local workers in the destinations they travel to3. Thomas Cook is looking to remove 70 million pieces of single-use plastics within the next 12 months and Eurostar is targeting a 50% reduction in plastics by 2020.

Resurgence of the trusted travel expert

One of the main reasons holidaymakers book with a travel professional is because they feel more confident doing so (45%)4 and Travel Trends 2019 looks into the demand for personal, tailored and expert travel advice.

In an age of limitless choice and information the service travel professionals provide is highly valued - offering a few well-selected holidays which meet the customer’s specific requirements.

Travel companies such as Hays Travel and Barrhead Travel have announced an increase in stores, cruise companies are using travel agents more and more in recognition of the critical part they play in selling cruises and there has a strong uplift in travel professional homeworkers – so all in all, it looks like the trusted travel expert has a bright future.  

People committed to holidays with Europe the top spot

Travel Trends 2019 also reveals that, despite the unprecedented political turbulence and uncertainty of the past year, Britons are firmly committed to taking holidays – with forward bookings for Summer 2019 12% up on this time last year5.

Europe tops the list of places people plan to travel to in the next 12 months, with 61% planning to take a trip to the continent next year. For example, Bulgaria and Greece are set to perform well with an increase in bookings for Summer 2019 of 30% and 6%, respectively6.

The desire to get a value-for-money break is a growing priority, due to stretched household budgets and the continued weak Pound. Package holidays are likely to prove a popular choice in the search for good value, after three in five (60%) people said they booked a package this year because it was the best option for the price.

Mark Tanzer, ABTA Chief Executive said:

“Sustainability issues are now firmly in the minds of holidaymakers, our research shows people are increasingly conscious of the positive influence they can have through their holiday booking choices and are more mindful of the actions they take. We expect these factors to further inform where and how they holiday next year. The travel industry has been working across a range of sustainability issues for some time now and continue to develop plans and initiatives which support local communities, their economies and the environment.

“With four months to go until we leave the EU, Brexit is getting closer yet the political process is still ongoing. Despite the uncertainty, early indications show people are still booking holidays, reflecting people’s strong commitment and desire to travel.”  

Additional key trends that feature in ABTA’s Travel Trends 2019 report are:

  • Wellness travel is on the rise
    Wellness tourism is now worth an estimated $639 billion globally7, growing more than twice as fast as general tourism. With trips globally up 20% since 2015, travel companies are increasingly catering to the demand for wellness holidays, with companies such as G Adventures, Intrepid’s 18-29 brand and Uniworld offering new programmes which seek to alleviate stress and boost wellbeing.
  • The tailor-made package
    Increasing numbers of holidaymakers look to a package for a good value break, recognising it is often the best option for price, as well as appreciating the ease and consumer protection that comes with it. We’re also seeing travel companies introducing new ways to provide flexible and tailor-made holidays, including Kuoni’s Meraki Travel and Solo travel specialist Just You. This means travellers who want a bespoke trip can do so while still enjoying the protections and reassurances of a package, if they book services together in the same purchase.
  • Technology supports a seamless holiday experience
    Service based technology is making travellers lives easier – from the moment they leave their front door to their return to home soil. Airport luggage drop-off services, facial recognition technology replacing passports, suncream booths and a dedicated departure beach are some of the services being introduced to ensure holidaymakers have smoother journeys.

The full report is available to download from www.abta.com/traveltrends2019

1,2  ABTA Consumer Trends survey (2014 and 2018), Arkenford.

G Adventures recently introduced a ‘Ripple Score’ tool which shows what percentage of a tour's local spend remains in the local economy. TUI has pledged to deliver 10 million ‘greener and fairer’ holidays by 2020, enabling more local people to share in the benefits of tourism. And Intrepid is supporting small local businesses to benefit from tourism, for example, travellers can visit one of the poorest regions of Myanmar and contribute to local businesses in a responsibly managed way.

ABTA Holiday Habits 2018

5, 6 Data sourced from GfK’s Travel Insights service. Travel Insights is a point of sale service measuring transactional booking data from tour operators and travel agents for outbound leisure travel from the UK.

Global Wellness Institute report, November 2018

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September Passenger Demand Shows Hurricane Hit

Global passenger traffic results for September showing that demand (measured in revenue passenger kilometers, or RPKs) rose 5.7% compared to the same month in 2016. This was the slowest year-on-year increase since February. Hurricanes Irma and Maria weighed heavily on the results, although growth already had been tapering. Capacity climbed 5.3% and load factor edged up 0.3 percentage points to 81.6%, which was a record for the month of September.

"September's growth in passenger demand was healthy, notwithstanding the heavy impacts of extreme weather events on the Americas," said Alexandre de Juniac, IATA's Director General and CEO. "Global economic conditions support rising passenger demand, but with higher cost inputs, the demand stimulation from lower fares has waned, suggesting a moderating trend in traffic growth."

SEPT 2017 (% YEAR-ON-YEAR)WORLD SHARE (1)RPKASKPLF- %-PT (​2)PLF- LEVEL(​3)
Total Market 100.0% 5.7% 5.3% 0.3​% 81.6%
Africa 2.2% 2.8% 0.0% 2.0% 74.0%
Asia Pacific 32.9% 8.7% 8.1% ​0.5% ​80.1%
Europe 26.4​% 7.1% 5.3% 1.4% 86.4%
Latin America 5.2% 7.1% 5.6% 1.2% ​81.9%
Middle East ​​9.6% 3.5% 4.5% -0.7% ​74.0%
North America 23.8% 0.4% 2.0​% ​-1.3% 82.0​%

(1) % of industry RPKs in 2016 (2) Year-on-year change in load factor (3) Load factor level

International Passenger Markets

International RPKs climbed 6.5% with airlines in all regions recording growth compared to 2016. Total capacity climbed 5.6%, and load factor rose 0.7 percentage points to 81.3%.

  • Asia-Pacific airlines' traffic rose 8.7% in September compared to the year-ago period, the strongest growth among regions. Capacity increased 7.8%, and load factor climbed 0.6 percentage points to 78.3%. A solid regional economic backdrop, helped by robust growth in China, is supporting passenger demand within the region.
  • European carriers saw September demand rise 7.1% over September 2016, in line with August growth of 7.0%. The upward trend in seasonally-adjusted demand has slowed considerably since May, but business confidence remains high and the economic backdrop is supportive. Capacity rose 5.2% and load factor surged 1.6 percentage points to 86.8%, which was the highest among regions.
  • Middle East carriers had a 3.7% rise in demand, the slowest rate of increase since February 2009. The Middle East-US market has been hit hard by the now lifted cabin ban on large portable electronic devices, as well as the various proposed travel bans to the US. Traffic between the region and the US has fallen for six consecutive months through August (the most recent month for which route data are available). Capacity rose 4.3%, and load factor slipped 0.4 percentage points to 74.5%.
  • North American airlines experienced a 3.0% rise in demand in September. Capacity rose 3.6% and load factor fell 0.5 percentage points to 81.0%. In addition to the impacts of hurricanes Irma and Maria, anecdotal evidence continues to suggest that inbound traffic to the US is being deterred by additional security measures now involved in traveling to the country.
  • Latin American airlines' performance also was affected by hurricane activity but strong underlying demand meant that traffic rose 8.5% compared to the same month last year. Capacity climbed at the same rate and load factor was flat at 82.2%, the second highest among regions.
  • African airlines posted a 3.6% rise in traffic in September, down from 6.5% in August. Capacity rose 0.3% and load factor jumped 2.4 percentage points to 73.8%. Conditions in the region's two largest economies—Nigeria and South Africa, are diverging again, with business confidence levels in South Africa consistent with falling output.

Domestic Passenger Markets

Domestic demand climbed 4.2% in September compared to September 2016, heavily affected by weather disruptions in the US market, which accounts for more than 40% of all domestic RPKs. India and China continued to lead all markets with double-digit annual traffic increases while elsewhere, results were mixed. Capacity rose 4.7% and load factor slipped 0.4 percentage points to 82.2%.

SEPT 2017 (% YEAR-ON-YEAR)WORLD SHARE1RPKASKPLF (%-PT)​2PLF (LEVEL)​3
Domestic 36.4% 4.2% 4.7% -0.4​% 82.2%
Dom. Australia (4) 1.0% -1.6% -3.1% 1.2% 79.5%
Dom. Brazil (4) 1.2% 6.5% 2.9% 2.8% ​82.9%
Dom. China P.R. (4) 8.7​% 10.1% 10.7% ​-0.5% 83.6%
Dom. India (4) 1.3% 15.5% 13.9% 1.1% ​83.4%
Dom. Japan (4) ​​1.1% 3.6% -0.4% 3.0% 76.3%
Dom. Russian Fed (4) 1.3% 7.3% 7.2% 0.1% 84.8%
​Dom. USA (4) 15.0%​ -1.2% 0.9% -1.8% 82.6%​

(1) % of industry RPKs in 2016 
(2) Year-on-year change in load factor 
(3) Load factor level 
(4) The seven domestic passenger markets for w hich broken-dow n data are available account for 30% of global total RPKs and approximately 82% of total domestic RPKs 

  • US domestic traffic fell 1.2%, reflecting the hurricane impacts. With operations at affected major airports having returned to normal, it appears the disruption will be short-lived.
  • Japan's domestic traffic also took a weather-related hit as Typhoon Talim caused a significant slowing of traffic growth from the 8.8% recorded in August to 3.6% in September. As with the US, the impact is expected to be temporary.

The Bottom Line

De Juniac expressed the aviation industry's solidarity with the victims of the hurricanes, and emphasized the importance of aviation's ability to deliver aid and support. "Our hearts go out to all those affected by the recent extreme weather events, which uprooted lives and communities and dealt heavy blows to local economies in the affected areas. It is at times like these that we truly see the vital role that aviation plays in disaster relief, bringing in much needed first responders and aid workers, as well as supplies, food and medicines to those in need," said de Juniac.

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Some 46 Million More Tourists Travelled Internationally in 2016 Compared To 2015

Demand for international tourism remained robust in 2016 despite challenges. International tourist arrivals grew by 3.9% to reach a total of 1,235 million, according to the latest UNWTO World Tourism Barometer. Some 46 million more tourists (overnight visitors) travelled internationally last year compared to 2015.

2016 was the seventh consecutive year of sustained growth following the 2009 global economic and financial crisis. A comparable sequence of uninterrupted solid growth has not been recorded since the 1960s. As a result, 300 million more international tourists travelled the world in 2016 as compared to the pre-crisis record in 2008. International tourism receipts grew at a similar pace in this period (complete 2016 receipts results will be reported in May).

“Tourism has shown extraordinary strength and resilience in recent years, despite many challenges, particularly those related to safety and security. Yet, international travel continues to grow strongly and contribute to job creation and the wellbeing of communities around the world”, said UNWTO Secretary-General Taleb Rifai.

By region, Asia and the Pacific (+8%) led growth in international tourist arrivals in 2016, fuelled by strong demand from both intra- and interregional source markets. Africa (+8%) enjoyed a strong rebound after two weaker years. In the Americas (+4%) the positive momentum continued. Europe (+2%) showed rather mixed results, with double-digit growth in some destinations offset by decreases in others. Demand in the Middle East (-4%) was also uneven, with positive results in some destinations, but declines in others.

Recalling that 2017 has been designated by the United Nations the International Year of Sustainable Tourism for Development, Mr. Rifai said “we need to work closer together to harness the contribution of tourism to economic growth, social inclusion, cultural and environmental preservation and mutual understanding, particularly when we live in times with such a deficit of respect and tolerance”.

Experts remain optimistic about 2017

The latest survey of UNWTO’s Panel of Experts shows continued confidence in 2017, with the large majority (63%) of the some 300 respondents expecting ‘better’ or ‘much better’ results than in 2016. The Panel score for 2017 virtually equals that of 2016, so growth is expected to be maintained at a similar level.

Based on current trends, the outlook of the UNWTO Panel of Experts and economic prospects, UNWTO projects international tourist arrivals worldwide to grow at a rate of 3% to 4% in 2017. Europe is expected to grow at 2% to 3%, Asia and the Pacific and Africa both at 5% to 6%, the Americas at 4% to 5% and the Middle East at 2% to 5%, given the higher volatility in the region.

2016 Regional Results

Results in Europe were rather mixed with a number of destinations affected by safety and security challenges. International arrivals reached 620 million in 2016, or 12 million (+2%) more than in 2015. Northern Europe (+6%) and Central Europe (+4%) both recorded sound results, while in Southern Mediterranean Europe arrivals grew by 1% and in Western Europe results were flat.

Asia and the Pacific (+8%) led growth across regions in both relative and absolute terms, recording 24 million more international tourist arrivals in 2016 to total 303 million. Growth was strong in all four subregions, with Oceania receiving 10% more arrivals, South Asia 9% more and North-East Asia and South-East Asia both 8% more.

International tourist arrivals in the Americas (+4%) increased by 8 million to reach 201 million, consolidating the solid results recorded in the last two years. Growth was somewhat stronger in South America and Central America (both +6%), while the Caribbean and North America recorded around 4% more arrivals.

Available data for Africa points to an 8% rebound in international arrivals in 2016 after two troubled years, adding 4 million arrivals to reach 58 million. Sub-Saharan Africa (+11%) led growth, while a gradual recovery started in North Africa (+3%).

The Middle East received 54 million international tourist arrivals in 2016. Arrivals decreased an estimated 4% with mixed results among the region’s destinations. Results for both Africa and the Middle East should be read with caution as they are based on limited available data.

 

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Global Passenger Traffic Results Show Demand Grew 7% Compared To Same Month In 2015

Global passenger traffic results for September showing that demand (measured in revenue passenger kilometers, or RPKs) grew 7% compared to the same month in 2015. This was the strongest year-over-year increase in seven months. Capacity climbed 6.6% and load factor edged up 0.3 percentage points to 81.1%. Growth in domestic traffic slightly outpaced growth in international traffic.​

International Passenger Markets

International RPKs climbed 6.9% with airlines in all regions recording growth compared to 2015. Total capacity climbed 7.2%, causing load factor to slide 0.2 percentage points to 80.4%.
  • ​European carriers saw September demand rise 5.2% over September 2015. Capacity rose 5.7% and load factor slipped 0.4 percentage points to 84.8%, which was the highest among regions. Demand growth seems to be returning to normal after the disruption caused by terrorism and political instability.
  • Asia-Pacific airlines’ traffic rose 8.6% in September compared to the year-ago period, although there are still signs of Asian travelers being put off by terrorism in Europe. Capacity increased 7.7%, and load factor rose 0.7 percentage points to 77.9%. 
  • Middle East carriers had an 11.5% rise in demand in September compared to a year ago, which was the largest increase among regions. Capacity rose faster, however, up 13.8%, and load factor dropped 1.5 percentage points to 73.9%.
  • North American airlines experienced a 3.3% rise in demand. While the upward trend in international traffic has eased of late, seasonally-adjusted passenger volumes have risen at an annualized rate of 6% since March. Capacity rose 4.2% and load factor fell 0.7 percentage points to 81.5%.
  • Latin American airlines’ September traffic rose 7.1% compared to the same month last year, aided by strong demand on international routes within the region. Capacity climbed just 2.4% and load factor surged 3.6 percentage points to 83.7%, second highest among regions. 
  • African airlines posted an 8% rise in traffic which was matched by an equivalent rise in capacity. Load factor was almost flat at 72.0%. The strong demand increase largely reflected favorable year-ago comparisons, as economic conditions in much of the continent remain challenging. 

Domestic Passenger Markets​

Domestic demand climbed 7.2% in September compared to September 2015, which was up from the 4.1% year-on-year growth recorded in August. India and China continued to experience double-digit annual traffic increases while elsewhere, results were decidedly mixed. All markets except Australia registered all-time highs in September load factors.
 
“September’s growth in passenger demand was healthy. Importantly, this rebound from August weakness suggests that travel demand is showing its resilience in the aftermath of terror attacks. We must, of course, be ever-alert to the ongoing terror threat. And overall the industry is still vulnerable to being buffeted by rising geopolitical tensions, protectionist political agendas, and weak economic fundamentals. This will still be a good year for the airline industry’s performance, but our profitability will continue to be hard-won,” said Alexandre de Juniac, IATA’s Director General and CEO. 
 
October saw the global aviation industry take a major step ahead to ensure that its growth is sustainable. “The nations of the world came together through the International Civil Aviation Organization (ICAO) to agree a plan to offset the environmental impact generated by future air traffic growth.
 
In taking this unprecedented step toward achieving long-term sustainability for an entire industrial sector, governments recognized the immense contribution aviation makes to economic development and global well-being. In conjunction with our investments in more efficient technologies, infrastructure and operations, this will ensure that aviation can continue to be the business of freedom, connecting our world with safe, efficient, reliable and sustainable air transport,” said de Juniac.
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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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