News & Industry Affairs
- June Air Passenger Market Analysis
- June Air Freight Market Analysis
- June State of the Region: Africa & Middle East
- June Economic performance of airline industry
- May Air Passenger Market Analysis
- May Air Freight Market Analysis
- April Air Passenger Market Analysis
- April Air Freight Market Analysis
- March-April Airlines Financial Monitor
- March Air Passenger Market Analysis
- March Air Freight Market Analysis
- February Air Passenger Market Analysis
- January Air Passenger Market Analysis
- January Air Freight Market Analysis
May 2017 IATA Air Passenger Market Analysis
Passenger demand growth slows in May, but remains robust
Slower growth in May, but a robust start to 2017
Slower growth in May, but a robust start to 2017 Having reached a six-year high of 10.9% in April, year-on- year growth in global RPKs slowed to (a still robust) 7.7% in May.
Industry-wide RPKs have now grown by 7.9% year-onyear
so far this year compared to the same period in
2016. This is equivalent to annual growth of around
8.6% once you allow for the extra day in 2016 on
account of it having been a leap year.
Moderation in SA trend from a stellar end to 2016
The upward trend in SA traffic has moderated from the double-digit annualized pace that we saw at the end of 2016 and into this year. Indeed, whereas industry-wide RPKs were growing at an annualized rate of more than 12% coming into 2017, this pace has fallen to around 8% over the past three months or so.
It is worth putting this moderation in perspective; after all, the current pace of growth is still very strong, well ahead of both the five-year and ten-year average rates, for example (6.4% and 5.5%, respectively).
Equally, however, the exceptionally supportive conditions for passenger demand that were a feature of the second half of last year have softened. This relates to two factors: first, the recent rise in business confidence has paused; having risen for five consecutive months starting in September 2016, the services purchasing managers’ index – a key measure of business confidence that is strongly linked with passenger growth – has tracked sideways since January.
Second, while lower airfares are continuing to
stimulate air passenger demand, the degree of
stimulation is starting to ease, partly reflecting upward
pressure on airlines’ costs. After adjusting for inflation, the price of air travel coming into Q2 2017 was around
6% lower than a year ago. We estimate that this
explains around two-fifths of the annual growth in
passenger traffic seen in May. However, the degree of
stimulus from lower fares is currently around half that
seen in H2 2016, and is likely to fade further during the
second half of this year.
Still strong support for the passenger peak season
The upshot is that passenger demand is likely to remain well supported during the upcoming peak travel months of July and August. All told, this is likely to underpin another above-trend year of RPK growth in 2017 overall. However, with the biggest stimulus to demand from lower oil prices now likely to be behind us, the strength of the economic backdrop will be an increasingly important driver of passenger demand into H2 2017.
Highlights of the May 2017 Air Passenger Market Analysis
- Year-on-year growth in global revenue passenger kilometres (RPKs) slowed to 7.7% in May, but stayed robust.
- The stronger global economic backdrop, as well as stimulus from lower airfares, has continued to drive passenger growth. However, the exceptionally supportive backdrop that we saw in H2 2016 has softened.
- A mixed month for international RPK growth, as India regains its position at the top of the domestic growth chart.
- The seasonally adjusted (SA) industry-wide load factor remains close to an all-time high.
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