IATA: Cheap airfares & better global economy boost demand

The International Air Transport Association (IATA) said Sunday that passenger demand for flights by Middle East airlines to the United States fell in April in year-on-year terms by 2.8 percent due to the laptop ban introduced by the U.

After allowing for inflation, the cost of air travel was 10 percent lower in the first quarter of 2017, compared to previous year, and IATA said that falling air fares accounted for around half the demand growth in April. But on a Y-o-Y basis, growth rate of 15.3% in April was slower as compared to 21.8% reported for the corresponding month of 2016.

The global air freight demand, measured in freight tonne kilometres (FTKs), rose 8.5 per cent in April 2017 compared to the year-earlier period.

However, their April growth rate was slower than the average pace of the last five years and was seen moving sideways since January. "And we must harness the momentum to drive transformational change across the way the industry operates", said Alexandre de Juniac, IATA's director general and CEO.

Last month, the U.S. authorities said the ban could be extended to flights from Europe. "And an IATA-commissioned survey of business travelers indicated that 15 percent would seek to reduce their travel in the face of a ban".

Turning to domestic passenger markets, overall air travel rose by 7.7% in April compared to the same month a year ago, with capacity up 6.2% and the load factor rising 1.2 percentage points to 83%. Demand rose in all major domestic markets except Australia. Moreover, in seasonally-adjusted terms, the region's worldwide traffic has tracked sideways since January.

The US electronics ban and a proposed travel ban from six countries in the Middle East have taken their toll on passenger numbers for US-Middle East routes, according to Iata figures. Total capacity also grew by 7.7%, while the average load factor rose 3.5 percentage points to 81.5%.

Business confidence indicators remain consistently upbeat, suggesting year-on-year FTK growth will remain robust for the rest of the second quarter, IATA said.

"April showed us that demand for air travel remains at very strong levels". By region, the April year-over-year increases were 14.4% for European carriers; 10.9% for Asia-Pacific airlines; 10.3% for North American airlines; 16.1% for Latin American carriers; and 17.2% for African airlines. Capacity rose 7.6 per cent and load factor jumped 2.4 percentage points to 80.3 per cent.

Interestingly, IATA notes here that Russian airlines enjoyed the fastest year-on-year growth rate at 16.7%.

Demand, measured in revenue passenger kilometres, rose by 10.7% compared with April 2016.

  • Leroy Wright