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April 2017 IATA Air Passenger Market Analysis
April air passenger demand grows at the fastest pace in six years

Further evidence of a robust start to 2017
Global revenue passenger kilometres (RPKs) grew by 10.7% year-on-year in April, up from 6.5% in March and the fastest pace since April 2011. The latest data provide further evidence of a strong start to 2017 for passenger demand growth: industrywide RPKs grew by 7.9% year-on-year so far this year to date compared to the same period in 2016. This is equivalent to growth of around 8.7% adjusting for the extra day in 2016 owing to the leap year, and is well ahead of the long-run average RPK growth rate of around 5.5%.

Favorable annual comparison is aiding growth…

The robust start to 2017 for passenger growth has been boosted in part by the moderate slowdown in the SA traffic trend seen in early-2016. We estimate that this factor accounts for around 0.7 percentage points of the year-on-year growth rate in April.

…but the upward trend in RPKs is strong

Nonetheless, there is no denying the strength of the current demand trend. Indeed, RPKs in SA terms have risen at an annualized pace of nearly 10% over the past six months or so, compared to around 6% over the same period in 2016.

This strong trend has been driven by a combination of a broad-based pick-up in global economic conditions, as well as lower airfares. Both factors have helped to underpin and to stimulate passenger demand. After adjusting for inflation, the price of air travel in the first quarter of 2017 was around 10% lower than a year ago. We estimate that this alone can explain around half the annual growth seen in April.

Strong support for peak season, but to weaken?

The drivers of demand look likely to remain supportive of passenger growth during the upcoming peak travel season in the middle months of the year. This is likely to underpin another above-trend year of RPK growth in 2017 overall.

However, there are some mixed signs emerging. This partly relates to further indications that passenger yields are bottoming out; as we noted in a recent Chart of the Week, this reflects upward pressure on fuel and non-fuel costs, as well as the stronger demand backdrop itself.  Meanwhile, although business confidence indicators remain at levels consistent with solid economic growth, the upward trend in confidence looks to have paused, particularly for the services sector. All told, with the biggest stimulus to demand from lower oil prices looking to now be behind us, the strength of the economic backdrop is likely to be the key driver of passenger demand in H2 2017 and into 2018.

Highlights of the April 2017 Air Passenger Market Analysis

  • Global revenue passenger kilometres (RPKs) grew by 10.7% year-on-year in April – the fastest pace in 6 years.
  • Industry-wide passenger demand continues to be supported by a pick-up in economic activity and lower airfares, although the ban on personal electronic devices looks to have weighed on Middle East-North America traffic.
  • Every region saw double-digit annual international RPK growth in April (Russia posted the fastest domestic growth).
  • The seasonally adjusted (SA) load factor posted a fresh all-time high. 
    Download the full document here. 

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