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December 2017 IATA Air Passenger Market Analysis
2017: above-trend air passenger growth and a record load factor

Stronger economic activity supports 2017 demand
Industry-wide revenue passenger kilometres (RPKs) grew by 7.6% year-on-year in 2017 as a whole. This was another year of above-trend passenger growth, well ahead of the ten-year average pace (5.5%).

Passenger growth in 2017 was supported by a broadbased pick-up in global economic conditions as well as stimulus from lower airfares (mainly earlier in the year). Lower fares have provided a strong tailwind to passenger demand since late-2014, and have helped to drive the RPK/GDP multiplier above its long-run median level for three years in a row.

RPKs are carrying solid momentum into 2018

Global passenger traffic is carrying solid momentum into 2018. (See Chart 2.) Admittedly, year-on-year passenger growth slowed to 6.2% in December – its slowest rate in three months. However, this slowdown mostly stemmed from the comparison with the doubledigit annualized growth trend seen in traffic seen during the final quarter of 2016.

Modest slowdown in RPK growth forecast in 2018

We forecast 2018 to be another year of above-trend growth for industry-wide RPKs, driven by the ongoing supportive economic backdrop: the composite Purchasing Managers’ Index (PMI) – a measure of global business confidence, which has proved to be a useful leading indicator of air passenger demand growth in the past – ended 2017 at its highest level in almost three years. It is currently consistent with yearon-year RPK growth in the region of 7.5-8% during early-2018. 

That said, full-year RPK growth in 2018 is forecast to be slightly slower than that seen in 2017. This is mainly because increases in airline input costs – notably fuel prices but also labor costs in certain countries – mean that we are unlikely to see the same degree of demand stimulation from lower airfares in 2018 than we have in recent years.

Robust growth for African airlines 
International RPKs flown by carriers based in Africa grew by 7.5% in 2017 relative to 2016. The result was set against a mixed economic backdrop for the region’s largest economies: activity in Nigeria returned to growth, helped by recent rises in oil prices, although political uncertainty took a toll in South Africa; economic indicators in that country are still consistent with falling economic output.

Highlights of the December 2017 Air Passenger Market Analysis

  • Global revenue passenger kilometres (RPKs) increased by 7.6% year-on-year in 2017 as a whole – another year of above-trend growth, well ahead of the ten-year average pace (5.5%).
  • RPKs are carrying solid momentum into 2018, alongside buoyant global economic conditions. Nonetheless, we expect a moderate slowdown in full-year growth in 2018, as the stimulus to demand from lower airfares fades.
  • The industry-wide load factor increased by 0.9% in 2017, taking it to a record calendar-year high of 81.4%.
  • India posted the fastest domestic RPK growth for the 3rd year in a row, driven by economic and network expansion. Download the full document here. 

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