Growth in global air traffic slowed slightly in October while cargo volumes expanded at the fastest pace in 18 months, new figures show.
The International Air Transport Association (IATA) monthly reports on the passenger and freight markets showed passenger demand, measured by revenue passenger kilometres (RPK), rose 5.8 per cent in October compared with the prior corresponding period.
While October was down slightly from the 7.1 per cent improvement recorded in September, the result was broadly in line with 10-year averages, IATA said.
And with capacity, measured by available seat kilometres (ASK) rising by more than demand at 6.3 per cent, load factors slipped 0.4 percentage points to 80.1 per cent.
Growth in RPKs was highest among airlines in Latin America (7.1 per cent), Middle East (seven per cent) and Asia Pacific (also seven per cent), while the smallest increase came from carriers in North America where demand improved 2.4 per cent.
IATA said the Middle East carriers’ seven per cent improvement in RPKs was the the region’s slowest pace of demand growth in 18 months.
While IATA noted the timing of some regional celebrations may have affected the results, the Middle East carriers’ international load factor of 70.1 per cent was the lowest October result since 2006.
“In seasonally adjusted terms, traffic has barely grown since July,” IATA said of the Middle Eastern airlines.
“Middle Eastern international load factors are under pressure.”
IATA director general and chief executive Alexandre de Juniac said: “While the negative traffic impact from terror attacks and political instability in parts of the world has receded, the long downward trend in yield – which helped to stimulate travel – has leveled off.”
“Furthermore, the recent OPEC agreement to restrict oil production suggests fuel prices have ended their slide.”
IATA said its the majority of respondents to its business confidence survey said they expected passenger yields to remain unchanged in the year ahead, while costs were tipped to go up.
“The upshot is that our respondents expect profit margins to come under pressure going into the new year,” the IATA report said.
In October, Qantas reported revenues for the three months to September 30 were down three per cent compared with the prior corresponding period as increased competition on international routes and a subdued domestic demand environment pointed to a weaker 2016/17 first half result.
Also, Virgin Australia reported a 2016/17 first quarter loss amid a sluggish domestic market affected revenues.
IATA figures showed the Australian domestic market grew capacity, measured by available seat kilometres (ASK) a slender 0.1 per cent in October, compared with the prior corresponding period, while RPKs were up 2.2 per cent.
As a result, load factors climbed 1.7 percentage points to 80.4 per cent.
The IATA report said any upward trend in RPKs remained “very modest”, given passenger traffic had increased at an annualised pace of less than one per cent over the past three years.
“The load factor remains well below the record high for the month that was reached in 2007,” IATA said of the Australian domestic market.
IATA, which has about 260 member airlines and represents roughly 83 per cent of global air traffic, also reported freight volumes had improved in October, with freight tonne kilometres (FTK) rising at the fastest pace in 18 months at 8.2 per cent.
Capacity, measured by available FTKs (AFTK), rose 3.6 per cent.
de Juniac said there were some “encouraging signs” in the freight market amid indications of a pick-up in new export orders.
However, the IATA chief executive cautioned there were still headwinds from weak global trade.
“Global air freight markets look set to end 2016 on a high note,” de Juniac said.
“We will enter 2017 propelled by some much-needed positive momentum.”
“The drivers of stronger growth are sending a major signal for change to the air cargo industry. Whether it is e-commerce or the trade in pharmaceuticals, shippers are demanding more than current paper processes can support. The shift to e-freight is more critical than ever.”
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