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Passenger traffic stays moderate amid global challenges in aviation

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Alexandre de Juniac. Photo: Bloomberg

Despite the pressure on air travel business globally, passenger traffic stayed moderate in September 2019, as demand climbed 3.8 per cent compared to the same month last year.

The International Air Transport Association (IATA), estimated that capacity increased by 3.3 per cent, and load factor climbed 0.4 percentage point to 81.9 per cent, which was a record for any September.

IATA’s Director-General and Chief Executive Officer (CEO), Alexandre de Juniac, said September marked the eighth consecutive month of below-average demand growth.

“Given the environment of declining world trade activity and tariff wars, rising political and geopolitical tensions and a slowing global economy, it is difficult to see the trend reversing in the near term,” he said.

The CEO added that these were challenging days for the global air transport industry, with pressure is coming from many directions.

“In a matter of weeks, four airlines in Europe went bust. Trade tensions are high and world trade is declining. The IMF recently revised down its GDP growth forecasts for 2019 to 3.0 per cent. If correct, this would be the weakest outcome since 2009, when the world was still struggling with the Global Financial Crisis.

“At times like these, governments should recognise the power of aviation connectivity to ignite the economy and drive job creation. Instead, too many governments—in Europe in particular—are fixated on aviation as the goose that lays the golden eggs of taxes and fees.

“It’s the wrong approach. Aviation is the business of freedom. Governments should harness its power to drive GDP growth, not tie it down through heavy and punitive tax and regulatory regimes,” de Juniac said.

In regional performance, African airlines’ traffic climbed 0.9 per cent in September, a steep fall-off from the 4.1 per cent growth recorded in August. Looking through the recent volatility in the numbers, however, traffic growth for the third quarter of 2019 remains solid at around three per cent year-over-year. Capacity rose 2.5 per cent, however, and load factor dipped 1.1 percentage points to 71.7 per cent.

Asia-Pacific airlines saw September traffic increase 3.6 per cent compared to the year-ago period, an increase over the 3.3 per cent annual growth recorded in August. Despite the uptick, growth remains well below that seen in 2018.

This is occurring amid a weaker economic backdrop in some of the region’s key states as well as trade tensions between the U.S. and China and, more recently, between Japan and South Korea. Political unrest in Hong Kong has also contributed to subdued regional demand and led to sharp capacity cuts to/from the hub. Capacity rose 5.0 per cent and load factor slid 1.1 percentage points to 78.2 per cent.

European carriers experienced a 2.9 per cent rise in September traffic, the region’s weakest performance this year and a decline from the 4.2 per cent year-over-year rise recorded in August.

In addition to slowing economic activity and faltering business confidence in many of the key European economies, the result was also affected by the demise of a number of airlines, along with pilot strikes. Capacity rose 2.5 per cent, and load factor climbed 0.3 percentage point to 86.9 per cent, which was the highest among regions.

Middle Eastern airlines posted a 1.8 per cent traffic increase in September, which was a slowdown from a 2.9 per cent rise in August. Capacity was up just 0.2 per cent, with load factor climbing 1.2 percentage points to 75.2 per cent. International traffic growth continues to be affected by a mix of structural challenges in some of the region’s large airlines, geopolitical risks and weaker business confidence in some countries.

North American carriers’ international demand climbed 4.3 per cent compared to September 2018, well up from the 2.9 per cent growth recorded in August and the strongest performance among the regions. Capacity rose 1.6 per cent, and load factor accelerated 2.2 percentage points to 83.0 per cent. Demand is being supported by solid consumer spending and continued job creation.


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