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December 2018 IATA Air Passenger Market Analysis
Robust passenger demand and a record load factor in 2018

Highlights of the December 2018 Air Passenger Market Analysis

  • Industry-wide revenue passenger kilometers (RPKs) grew by a robust 6.5% in 2018 as a whole, slightly below the 8.0%rate of 2017.
  • Capacity grew at a slower pace than traffic in 2018 and the passenger load factor increased to a record high of 81.9%.
  • Although passenger demand has moderated, 2019 is still looking robust in the face of economic uncertainty.

Africa’s demand performs better than in 2017…
Africa was one of the two regions (along with North America) that posted an increase in annual international RPK growth compared to 2017 (6.5% vs 6.0%). This came despite the mixed economic backdrop for the region’s largest economies over the course of 2018. That said, the upward trend in regional passenger demand softened to 4.9% year-on-year in end-2018, from 5.7% in November.

Modest slowdown in passenger demand in 2018
Industry-wide revenue passenger kilometers (RPKs) rose by 6.5% in 2018 as a whole. While this was another year of above trend growth, the pace was slower compared to 2017 (8.0%). The moderation in traffic came alongside growing signs of slowing global economic expansion in the second half of 2018. Indeed, passenger volumes have grown at a 5% annualized pace over the course of H2 2018 compared to around 9% earlier in the year. On top of that, while lower average airfares still provided support to RPKs during 2018, the impetus was not as strong as in the previous years. 
   Ongoing uncertainty about global geopolitical developments and issues such as Brexit and rising US-China trade tensions contributed to the RPK/GDP multiplier returning to its long-run median level for the first time since 2011. 

   Global passenger traffic is carrying solid momentum into 2019. Nonetheless, the softening in the upward traffic trend over the past six months, has seen year-on-year passenger growth moderating to 5.3% in December – the slowest pace since January 2018.

Solid growth in RPKs expected for 2019

Our current forecast is for passenger demand to rise by 6.0% in 2019, marking the tenth consecutive year of above trend growth in RPKs. The outlook is being supported by forecasts of a still relatively sound global economy. That said, the slower rate of RPK growth in the second half of last year and the increasing uncertainty about global economic conditions in 2019 pose downside risks to the passenger demand growth forecast in the upcoming year. 

   Indeed, the global composite Purchasing Manager’s Index – a measure of global business confidence, which has proved to be a useful leading indicator of air. passenger demand in the past – ended last year at its lowest level in around two and a half years. Although the result still remains consistent with RPKs sustaining its current growth pace, it provides an indication that there is little upside to growth in the near term. Download the full document here. 

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