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ME carriers see slowdown in air travel demand

GENEVA, July 6, 2017

Middle East carriers registered the slowest year-over-year traffic growth in May, recording a 3.7 per cent rise in demand compared to a year ago - close to an eight-year low.

Accordiing to figures released by the International Air Transport Association (Iata), capacity increased 5.7 per cent, and load factor dropped 1.3 percentage points to 69.8 per cent.

Although year-to-year comparisons are distorted by the strong performance for the same period a year ago, the slow-down also reflects the ban on the carriage of large portable electronics devices (PEDs) in the cabin from 10 airports in the region to the US, as well as a wider impact on inbound travel to the US from the Trump Administration's proposed travel bans.

Passenger traffic growth in the Middle East to North America market was already slowing in early-2017. But RPKs fell again in April (down 1.2 per cent) for just the second time since at least 2010. In view of the recent Supreme Court ruling these impacts could continue. By comparison, the route to and from Europe has continued to trend upwards this year.

African airlines posted the strongest traffic growth across all regions in May, with a 11.7 per cent year-over-year increase, followed by Asia-Pacific airlines (10.5 per cent), Latin American airlines (9.3 per cent), European carriers (7.5 per cent), North American airlines (4.8 per cent) and lastly Middle East carriers.

Overall, international traffic demand rose 7.6 per cent, with airlines in all regions recording growth, led by airlines in Africa for a second consecutive month. Total capacity climbed 5.7 per cent, with load factor rising 1.4 percentage points to 78.5 per cent.

Domestic demand rose 7.9 per cent in May compared to May 2016, down slightly from the 8.1 per cent year-on-year growth recorded in April. Results varied widely, with China, India, Japan and Russia showing double-digit percentage growth while Australia, Brazil and US were in the low single-digit range.

According to the Iata global passenger traffic results for May, demand (measured in revenue passenger kilometers, or RPKs) rose 7.7 per cent compared to the same month in 2016. This was slower than the 10.9 per cent growth recorded in April. However, this still was well ahead of the five- and 10-year average growth rates.

Capacity climbed 6.1 per cent, and load factor rose 1.2 percentage points to 80.1 per cent, which was a record high for the month. All regions, excluding the Middle East and North America, posted record-high May load factors.

After adjusting for inflation, airfares at the start of the second quarter were around 6 per cent lower than a year ago. Iata estimates that this contributed to around two-fifths of the annual growth in passenger traffic seen in May. However, the degree of fare stimulus is around half that seen in the second half of 2016. This stimulus is likely to fade further in light of rising airline cost pressures, while business confidence has softened. However, passenger demand is likely to remain well supported during the upcoming peak travel months of July and August.
 
"Passenger demand is solid. And we don’t foresee any weakening over the busy summer months in the Northern Hemisphere. But the rising price of fuel and other input costs is likely to see airlines’ ability to stimulate markets with lower fares taper over the coming months. In parallel, rising trade protectionism and barriers to travel are worrying trends that, if unchecked, could impact demand. As a business airlines depend on borders that are open to trade and people," said Alexandre de Juniac, Iata’s director general and CEO. - TradeArabia News Service




Tags: demand | travel | Passenger | carriers | slow | Middle | East |

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