Aerospace

IATA reports January passenger numbers up but freight down

Posted 8 March 2019

The International Air Transport Association (IATA) announced global passenger traffic results for January 2019, showing traffic (revenue passenger kilometres or RPKs) rose 6.5% compared to January 2018, the fastest growth in six months but global air freight markets showed demand, measured in freight tonne kilometres (FTKs), fell 1.8% in January 2019, the worst performance in the last three years.

January capacity (available seat kilometres or ASKs) rose 6.4% and load factor inched up 0.1 percentage point to 79.6%.

“Twenty-nineteen has started on a positive note, with healthy passenger demand in line with the 10-year trend line. However, market signals are mixed, with indications of weakening business confidence in developed economies and a more nuanced picture across the developing world,” said Alexandre de Juniac (above), IATA’s Director General and CEO.

International Passenger Markets
International passenger demand rose 6.0% in January compared to the same month last year, which was up from a 5.3% rise in December year-over-year. All regions recorded growth, led by Europe for a fourth consecutive month. Capacity increased 5.8% and load factor climbed 0.2 percentage point to 79.8%.

•    European carriers’ international traffic climbed 7.7% in January compared to the year-ago period, down from an 8.6% annual increase in December. This moderation likely reflects uncertainty over the region’s economic situation, including lack of clarity over Brexit. Capacity rose 8.8% and load factor fell 0.9 percentage point to 80.3%.

•    Asia-Pacific carriers recorded a demand increase of 7.1% compared to January 2018, solidly above the 5.0% growth in December. Capacity rose 5.1%, and load factor surged 1.5 percentage points to 81.7%, second highest among the regions. Healthy regional growth is being underpinned by rising incomes and an increase in the number of airport pairs.

•    Middle East carriers had the weakest growth, with demand up just 1.5% compared to January 2018. Nevertheless, this still was improved over a 0.1% drop in traffic in December. It is premature to say whether this improvement represents a trend. Capacity climbed 3.2% and load factor fell 1.3 percentage points to 75.6%.

•    North American airlines experienced a 4.7% traffic rise over a year ago, improved from a 3.7% annual rise the month before, while capacity climbed 3.5% and load factor increased 1.0 percentage point to 80.6%. Demand is being supported by comparatively strong economic conditions which have delivered a low unemployment rate and bolstered consumer spending.

•    Latin American airlines’ traffic climbed 5.8% in January compared to January 2018. Although this represented a slight softening compared to the growth in December of 6.1%, signs are that passenger volumes have accelerated a little in recent months in seasonally-adjusted terms. Capacity rose 6.7%, however, and load factor slipped 0.7 percentage point to 82.8%, which still was the highest among the regions.

•    African airlines saw January traffic rise 5.1%, up from 3.8% in December. Concerns continue about the region’s largest economies, South Africa and Nigeria, however. The region’s capacity rose 2.9%, and load factor jumped 1.5 percentage points to 70.9%.

Domestic Passenger Markets
Domestic traffic climbed 7.3% in January, year-on-year, the fastest pace since August and up from 5.6% growth in December. All markets showed growth, with China, India and Russia posting double-digit annual increases. Domestic capacity increased 7.5% and load factor slid 0.1 percentage point to 79.3%.

• US domestic traffic rose to a four-month high of 5.8% in January; however, in seasonally-adjusted terms the upward trend has moderated since mid-2018, possibly reflecting concerns about the economic outlook and trade tensions with China.
• Russian domestic traffic rose 10.4% in January, down from 12.4% in December, but continuing the strong upward trend in passenger traffic.

“Aviation is the business of freedom, liberating us from the constraints of geography and distance, but to be effective we require borders that are open to the movement of people and goods. We welcome the latest EU proposals to adopt a common-sense approach to maintaining and enabling the connectivity between the UK and the EU in the event of a no-deal Brexit. But this is just a temporary solution and with Brexit still set for 29 March, we urge both sides to agree a comprehensive Brexit package that will ensure the seamless air connectivity travelers expect,” said de Juniac.

Freight
Meanwhile, although freight demand (measured in FTKs) decreased 1.8% in January 2019 (compared to same period in 2018), freight capacity, measured in available freight tonne kilometres (AFTKs), actually rose by 4.0% year-on-year in January 2019. This was the eleventh month in a row that capacity growth outstripped demand growth.

Demand for air cargo continues to face significant headwinds. Global economic activity and consumer confidence have weakened. And the Purchasing Managers Index (PMI) for manufacturing and export orders has indicated falling global export orders since September 2018.

”Air cargo markets contracted in January. This is a worsening of a weakening trend that started in mid-2018. Unless protectionist measures and trade tensions diminish there is little prospect of a quick re-bound,” said Alexandre de Juniac, IATA’s Director General and CEO.

Regional Performance
Only two of six regions reported year-on-year demand growth in January 2019 – North America and Africa. Asia-Pacific, Europe and the Middle East all contracted, while Latin America was flat.

Asia-Pacific airlines saw demand for air freight shrink by 3.6% in January 2019, compared to the same period in 2018. Weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy impacted the market. Capacity increased by 4.1%.

North American airlines posted the fastest growth of any region for the eighth consecutive month in January 2019, with an increase in demand of 3.3% compared to the same period a year earlier. Capacity increased by 5.0%. 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 3.1% in January 2019 compared to a year ago. Capacity increased by 2.8% 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. Trade tensions and uncertainty over Brexit also contributed to a weakening in demand.

Middle Eastern airlines’ freight volumes contracted 4.5% in January 2019 compared to the year-ago period. Capacity increased by 4.1%. Seasonally-adjusted international air cargo demand, which trended upwards for the past three months helped by stronger trade to/from Europe and Asia, has started to decline.

Latin American airlines’ freight demand was flat (0.0%) in January 2019 versus last year. Despite the economic uncertainty in the region, a number of key markets are performing strongly. Freight traffic within South America and between Central and South America grew at a double-digit rate in January. And demand on routes between North and South America also performed well. Capacity decreased by 0.7%.

African carriers saw freight demand increase by 1.0% in January 2019, compared to the same month in 2018. Capacity grew 8.2% year-on-year. Seasonally-adjusted air cargo demand has now trended upwards for six months. And while seasonally-adjusted international freight volumes are lower than their peak in mid-2017, they are still 35% higher than their most recent trough in late-2015.

World Cargo Symposium
The challenges and opportunities facing the air cargo industry will be discussed at the 13th World Cargo Symposium which will gather the air cargo industry in Singapore, 12th-14th March.