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IATA news    |    January 2017 IATA Air Passenger Market Analysis

January 2017 IATA Air Passenger Market Analysis  
Annual RPK growth accelerates to a 5-year high at the start of 2017

A strong start to 2017 for passenger traffic 
Annual growth in industry-wide revenue passenger kilometres (RPKs) accelerated to 9.6% in January – its fastest pace since April 2011 and the strongest start to the year since 2005. The Middle East and Asia Pacific regions both posted double-digit annual growth rates, while North American airlines were the laggard for the fourth consecutive month (3.4%). 

Upward traffic trend has accelerated in recent months
The shifting timing of Chinese New Year is always a complicating factor for comparisons at this time of year. This has traditionally been a bigger issue for the air freight market, but it may increasingly affect passenger data, particularly as the Chinese market continues to grow as a share of global traffic. We estimate that its relatively early timing this year could account for as much as 0.5% percentage points of the annual growth rate in January (ie, industry-wide annual growth would have been closer to 9% without it). In any case, the bigger picture is that the trend in seasonally-adjusted (SA) RPKs accelerated strongly over the final third of 2016 and into 2017. Industry-wide RPKs have grown at an annualized pace of nearly 15% over the past three months. (See Chart 1.)

This pick-up in the passenger trend has reflected a combination of passengers adjusting to the multiple terrorism and political ‘shock’ events seen in early 2016 as well as an upturn in the global economic cycle. The global purchasing managers’ index reached its highest level since May 2011 in February. (See Chart 2.) Lower airfares have also served to stimulate demand: yields continued to trend downwards during H2 2016, and fell by around 8% for the year as a whole.

One of the main uncertainties for 2017 is the extent to which lower fares will continue to stimulate demand. Differing hedging practices throughout the industry mean that changes in oil prices tend to impact airline fuel bills with a lag. Big movements in exchange rates can also can influence how changes in US-dollar priced fuel affects individual airlines. But given that oil prices are currently around double their level of a year ago, the biggest stimulus to demand may have passed. As a result, the strength of the economic cycle will play an important role in driving the pace of global passenger growth in 2017.


Highlights of the January 2017 Air Passenger Market Analysis

  • Industry-wide passenger traffic grew by 9.6% year-on-year in Jan – its fastest pace in more than five years.
  • The seasonally-adjusted (SA) trend accelerated coming into 2017, reflecting a combination of stimulus from lower airfares and stronger economic conditions, posing upside risks to our forecast for the year as a whole.
  • India and China continue to lead the way on the domestic front, alongside a tentative recovery in Brazil.
  • The industry-wide passenger load factor remains elevated close to its record SA high. 
    Download the full document here.

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