IATA predicts slower air traffic growth, warns rising cost to slow momentum

The International Air Transport Association (IATA) has reported strong airline revenue growth for July, but warns rising costs will see the momentum slow over the coming months.

Total revenue passenger kilometres (RPKs) for IATA’s member airlines rose 6.2 per cent for July compared to the same month in 2017. However, this was down from the 8.1 per cent growth seen in June.

Capacity increased by 5.5 per cent, while load factors rose 0.6 percentage points to a record July high of 85.2 per cent.

However, IATA found that global passenger demand was only up 5.3 per cent year-on-year compared to 8.2 per cent in June.

Despite slowing demand, all regions reported overall growth, led by Asia Pacific for the first time in three years. The market saw traffic rise 7.5 per cent, while capacity was up 6 per cent and load factors grew to 82.1 per cent.

Europe experienced traffic growth of 4.4 per cent – down from 7.1 per cent in June – but IATA says passenger volumes have been tracking sideways, reflecting mixed developments on the economic front and the possible effects of air traffic control strikes seen across the region.

Europe also had the highest load factor of all regions at 89.1 per cent.

While IATA agrees the figures marked a solid start to the peak travel season, director general and CEO Alexandre de Juniac seemed hesitant to celebrate.

De Juniac said: “The industry posted another month of solid traffic growth. And the record load factor shows that airlines are becoming even more efficient in terms of deploying capacity to meet demand. However, rising costs – particularly fuel – will likely limit the stimulus we would expect from lower airfares. Therefore, we do expect to see a continued slowing of growth compared to 2017.”

Commenting on the issue faced by European carriers resulting from air traffic control shortages and strikes, de Juniac continued: “The second half of the year got off to a solid start. The strong demand we experienced in July is confirmation that summer is when people want to travel, to explore new places and to reunite with friends and family.

“Unfortunately for air travellers in Europe, summer also brought delays and disappointment, while for airlines, it meant accepting schedule inefficiencies and longer flight times. That’s because air traffic capacity has not kept pace with demand and because some controllers used the opportunity of the peak traffic period to launch strikes and work slowdowns.

“Travellers want to get to their holidays on time. It’s past time for the European Commission, member states and air navigations service providers to take urgent action to eliminate European airspace bottlenecks and to discourage air traffic controllers from penalising air travellers when they are unhappy over a contract.” iata.org