IATA: Soft start to peak pax travel period in July

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Tariffs, trade wars, and uncertainty over Brexit are contributing to a weaker demand environment.
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The International Air Transport Association (IATA) announced slowing global passenger demand growth for July. Total revenue passenger kilometres (RPKs) rose 3.6 percent, compared to the same month in 2018. This was down from 5.1 percent annual growth recorded in June. All regions posted traffic increases. Monthly capacity (available seat kilometres or ASKs) increased by 3.2 percent and load factor rose 0.3 percentage point to 85.7 percent, which is a new high for any month.

“July’s performance marked a soft start to the peak passenger demand season. Tariffs, trade wars, and uncertainty over Brexit are contributing to a weaker demand environment than we saw in 2018. At the same time the trend of moderate capacity increases is helping to achieve record load factors,” said Alexandre de Juniac, IATA’s director general and CEO.

International Passenger Markets: July international passenger demand rose 2.7 percent compared to July 2018, which was a deceleration compared to the 5.3 percent growth recorded in June. Capacity climbed 2.4 percent, and load factor edged upward 0.2 percentage point to 85.3 percent. All regions reported growth, led by airlines in Latin America.

Asia-Pacific airlines’ July traffic rose 2.7 percent over the year-ago period, a slowdown compared to June growth of 3.9 percent and their weakest performance since early 2013. Capacity increased 2.4 percent and load factor rose 0.2 percentage point to 82.6 percent. US-China and Japan-South Korea trade tensions as well as political tensions in Hong Kong all have weighed on business confidence.

European carriers registered a modest 3.3 percent annual growth in July, down from a 5.6 percent year-over-year increase in June. This is the slowest rate of growth since mid-2016. Continuing uncertainty over Brexit and slowing German exports and manufacturing activity contributed to a weakening in business and consumer confidence. Capacity rose 3.2 percent, and load factor climbed 0.1 percentage point to 89 percent, highest among the regions.

Middle East carriers had a 1.6 percent increase in demand for July, well down on the 8.3 percent growth recorded for June, after the end of Ramadan. Weakness in global trade, volatile oil prices and heightened geopolitical tensions have been negative factors for the region. July capacity climbed 1 percent compared to a year ago and load factor rose 0.4 percentage point to 81.3 percent.

North American airlines’ traffic climbed 1.5 percent compared to July a year ago. This was down from 3.5 percent growth in June, reflecting the slowdown in the US and Canadian economies and the trade disputes. July capacity rose 0.7 percent with the result that load factor climbed 0.7 percentage point to 87.9 percent, second highest among the regions.

Latin American airlines experienced a 4.1 percent rise in traffic in July, which was the strongest growth among the regions but a decline from 5.8 percent year-over-year growth in June. It occurred amid continued disruption following the demise of Avianca Brasil and more challenging business conditions in some key regional economies. Capacity rose 2.7 percent and load factor climbed 1.1 percentage points to 85.6 percent.

African airlines’ July traffic rose 3.6 percent, a significant decline from 9.8 percent growth recorded in June, as weakening business confidence in South Africa offset solid economic conditions elsewhere on the continent. Capacity rose 6.1 percent, and load factor slipped 1.7 percentage points to 72.9 percent.

Domestic Passenger Markets: Domestic travel demand outperformed international growth in July, as RPKs rose 5.2 percent in markets tracked by IATA, up from 4.7 percent growth in June. Domestic capacity climbed 4.7 percent, and load factor rose 0.4 percentage point to 86.5 percent. China’s domestic traffic rose 11.7 percent in July—an acceleration over the 8.9 percent growth recorded in June and the strongest domestic performance. Growth is benefitting from lower fares and more connections. Japan’s domestic traffic climbed 4.7 percent in July, up from 2.6 percent in June. Business confidence and economic growth are relatively positive at the moment.

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