AIR PASSENGER MARKET ANALYSIS SEPTEMBER 2014

AIR PASSENGER MARKET ANALYSIS
SEPTEMBER 2014
KEY POINTS
 Air travel volumes were up 5.3% in September year-on-year, slightly slower than the August rise of 6.3%, but a
continuation of the positive growth trend in air travel.
 Toward the end of 2013 there was a solid upturn in the global economic cycle, but that momentum paused during
the early months of 2014 with trade and business activity showing some decline. Recent data, however, show that
measures of economic activity are looking better in some regions, but that downside risks have emerged in other
parts of the world. Trends in air travel volumes, shown in the first chart below, are consistent with these
developments.
 International revenue passenger kilometers were up 5.3% in September compared to a year ago. There was a
contraction in volumes compared to August, but that is likely a correction after the strong increase in August.
Traffic growth for Asia Pacific carriers was a solid 4.8% in September. Although this is a slower rate of increase
than August, the recent trend has been positive and reflects better demand conditions in the region, including
stronger trade activity which encourages business travel. By contrast, European airlines recorded growth of 3.9%
in September compared to a year ago, which is a notable slowdown on the August rise of 7.0%, and could be the
first sign of weakness owing to a lapse in the Eurozone economic recovery. Part of the slowdown, however, could
also be due to the impacts of the Air France crew strike during the month of September.
 Domestic RPKs rose 5.3% in September year-on-year. Domestic RPKs in Russia could be showing the first sign
of slowdown as a result of the Russia-Ukraine crisis with a rise of 5.6% in September year-on-year, compared to
the August increase of 10.1%. By contrast, there was a huge spike in domestic travel growth in India (26.3%)
compared to a year ago, which is the result of fare reductions by local carriers.
 Industry load factors increased slightly in September compared to August as a result of a strong rise in domestic
demand. Domestic load factors are starting to recover some of the ground lost in the first half of 2014. By
contrast, international load factors contracted over the month, continuing a broadly flat trend so far this year.
 The outlook for air travel remains positive on balance, despite the presence of some downside risk. Demand
conditions are improving in the US and are relatively better in Asia Pacific compared to earlier in 2014. This
should help offset some adverse developments in other parts of the world, including the recent faltering of the
Eurozone economic recovery.
Worldwide growth in air travel and business confidence
Total Air Freight and Passenger Volumes
Source: IATA, JP Morgan/Markit
18
65
Monthly RPK (Billions)
490
470
16
450
430
15
410
14
390
370
Revenue Passenger Kilometers (RPKs)
Freight Tonne Kilometers (FTKs)
350
330
2007
13
2009
2010
2011
2012
2013
2014
15%
60
10%
55
5%
50
45
0%
40
Business Confidence
35
25
2007
-5%
Growth in RPKs
-10%
30
11
2008
Monthly FTK (Billions)
17
Index of business confidence
510
-15%
2008
2009
2010
2011
2012
2013
Jul-05
% change over year
Source: IATA (Seasonally Adjusted)
Air Passenger Market Analysis
September 2014
Year on Year Comparison
Sep 2014 vs. Sep 2013
Month on Month Comparison
YTD 2014 vs. YTD 2013
Sep 2014 vs. Aug 2014
RPK
ASK
PLF
RPK
ASK
PLF
RPK
ASK
PLFpt
International
5.3%
5.7%
80.5%
6.3%
6.5%
79.9%
-0.3%
0.1%
-0.3%
Domestic
5.3%
4.0%
80.0%
5.2%
4.3%
81.0%
0.7%
0.2%
0.6%
5.3%
5.1%
80.3%
5.9%
5.7%
80.3%
0.1%
0.1%
0.1%
Total Market
Data are seasonally adjusted. All figures are expressed
in % change MoM except, FLFpt which are the
percentage point difference between LF of two months.
FTK: Freight-Tonne-Kilometers; AFTK: Available Freight Tonne Kilometers; FLF: Freight Load Factor. All
Figures are expressed in % change Year on Year except FLF which are the load factors for the specific month.
PASSENGER MARKET
International Markets
International Passenger Market
International Passenger Growth by Region
Source: IATA
Source: LATA
18%
370
Sep-14
14%
% Growth YoY in RPKs
Monthly RPKs (Billion)
Aug-14
15.5% 15.8%
16%
320
270
220
Actual
Seasonally Adjusted
12%
10%
8.3%
8%
7.0%
5.8%
6%
5.3%
4.6%
4.8%
3.9%
4%
2%
7.2%
7.0%
3.2%
2.1%
1.8%
0%
170
2007
2008
2009
2010
2011
2012
2013
2014
Africa
Asia/Pacific
Europe
Latin
America
Middle East
North
America
Industry
 International revenue passenger kilometers were up 5.3% in September compared to a year ago. There was a
contraction in volumes in September compared to August, but this is likely a correction after the strong increase in
August. International load factors contracted over the month, continuing a broadly flat trend so far this year, with
capacity expanding slightly despite the fall in volumes.
 Carriers in the Middle East once again recorded the strongest increases in international air travel, with a rise of
15.8% in September year-on-year. Airlines in the Middle East continue to benefit from the strength of regional
economies and solid growth in business-related premium travel. Business confidence in the United Arab Emirates
has started to pick-up again after a pause in improvements in early Q2. Export orders have continued to expand
very strongly since early 2014, supporting international business activity and related travel.
 Traffic growth for Asia Pacific carriers was a solid 4.8% in September. Although this is a slower rate of increase
than August, the recent trend has been positive and reflects better demand conditions in the region – including
stronger trade activity which encourages business travel. Recent improvements have also been supported by
stability in the Chinese economy, which picked-up after a slow start to the year, helped by government fiscal
stimulus. Latest data, however, suggest that further cooling in the property market has weakened growth
momentum in Q4. It is now unclear whether the 7.5% economic growth target for 2014 will be reached.
 By contrast, European airlines recorded growth of 3.9% in September compared to a year ago, which is a notable
slowdown on the August rise of 7.0%, and could be the first sign of weakness due to a lapse in the Eurozone
economic recovery. Latest indicators show a weakening in key economies including Germany owing to the
Russia-Ukraine crisis and related EU sanctions, as well as a reversal in prior improvements in consumer
confidence. These developments have placed downward pressure on the region’s economic recovery and could
start to do the same for air travel demand in the months ahead. Part of the slowdown in September, however,
could also be due to the impacts of the Air France crew strike which touch place for 14 days during that month.
 North American airlines experienced a 2.1% increase in international RPKs in September compared to a year
ago, one of the slowest rates among regions. However, recent data reveal that underlying growth trends in
business activity are positive and growth in trade volumes has accelerated, which bodes well for business-related
international travel. North American carriers will likely sustain rates of growth around the trend seen so far this
year (3.3%), if not faster, with these positive developments in the demand backdrop.
 Carriers in Latin America experienced solid growth of 4.6% in September year-on-year, but a notable slowdown
on the previous month. Although growth in the Brazilian economy remains fundamentally weak and recent
Air Passenger Market Analysis
September 2014
indicators of growth and business activity are showing signs of further weakness, regional trade volumes have
been improving, and that is a good sign for international air travel demand going forward.
 Airlines in Africa experienced a 1.8% rise in international RPKs in September compared to a year ago. There can
be significant volatility in volumes for this region, so the deceleration in growth rates (compared to August’s strong
7.0% increase) cannot be immediately interpreted as a trend change. The weakness in international air travel for
regional carriers so far this year reflects adverse economic developments in some parts of the continent.
However, major economy South Africa has managed to avoid entering a recession, and this could help ease
some of the downward pressure on air travel for the region’s carriers. In addition, the effect of any Ebola-related
traffic downturn is mostly restricted to Guinea, Liberia and Sierra Leone, but these markets comprise a very small
proportion of overall African traffic.
Passenger Load Factor on International Market
International Passenger Load Factor by Region
Seasonally Adjusted
Source: IATA
Source: IATA
81%
90%
80%
Sep-14
85%
83.7%
84.7%
83.8%
82.4%
78%
80.7%
80.1% 79.9%
% ASKs
% of ASKs
79%
Sep-13
77%
76%
80%
77.9%
80.5%
78.0%
76.2%
75%
71.1%
75%
77.4%
70.5%
70%
74%
65%
73%
72%
2007
60%
2008
2009
2010
2011
2012
2013
Africa
2014
Asia/Pacific
Europe
Latin
America
Middle East
North
America
Industry
Domestic Market
Domestic Passenger Market
Domestic Passenger Growth by Country
Source: IATA
Source: IATA
210
30%
200
26.3%
180
170
160
150
140
Sep-14
20%
15%
10.1%
10%
8.6%
6.6%
7.6%
6.6%
130
5.6%
Seasonally Adjusted
2.7%
1.2%
1.4%
2008
2009
2010
2011
2012
2013
2014
4.6%
4.0%
5%
Actual
120
110
2007
Aug-14
25%
% Growth YoY in RPKs
Monthly RPKs (Billion)
190
2.7%
2.0%
5.3%
3.6%
0%
Australia
Brazil
China, P.R.
India
Japan
Russian
Federation
USA
Industry
 Domestic RPKs in Russia could be showing the first sign of slowdown as a result of the Russia-Ukraine crisis and
ensuing economic slowdown with a rise of 5.6% in September year-on-year, compared to the August increase of
10.1%.
 By contrast, there was a huge spike in domestic travel growth in India (26.3%) compared to a year ago. Prior
improvements in growth rates for this market were potentially reflecting revived confidence over the new
business-supportive government regime. But the result for September comes as a result of market stimulation by
local carriers.
 Chinese RPKs rose at a strong rate of 8.6% in September year-on-year. This is a slight improvement on August
growth. Although some indicators like industrial production showed decline in Q3, business activity (services
sectors) recorded a strong increase and that bodes well for economic performance in the near-term. Moreover,
consensus views are for economic growth to be sustained at 7.5% in 2014.
 Domestic air travel in Brazil slowed in September, rising 4.0% on a year ago, compared to a 6.6% increase in
August. So far this year, conditions in the Brazilian economy have been challenging, with inflation continuing to
rise and consumer confidence waning. Given that the demand backdrop is weak and a presidential election was
looming, it’s unlikely that growth will improve notably in the near term.
 In the US, domestic air travel rose by 3.6% in September year-on-year. Data continue to show steady increases
in consumer confidence as well as rising employment activity. However, with wage growth remaining subdued,
the benefits for air travel demand could be limited for the time being.
Air Passenger Market Analysis
September 2014
 Growth in domestic air travel in Australia remains weak, with a slow 2.7% rise in September compared to a year
ago. The economy is rebalancing due to the end of the mining-led boom, and although some sectors have shown
signs of stronger growth, the economy remains sluggish. Moreover, consumer sentiment is subdued, likely
reflecting concerns over rising unemployment.
 Japan’s domestic air travel increased by a slow 2.0% in September compared to a year ago. There has been
some weakness in air travel volumes over recent months as the economy adjusts to April’s sales tax increase.
Latest results of JP Morgan/ Markit business survey, however, indicate a small rebound in domestic demand
since the introduction of the tax. If this trend continues, growth in domestic air travel could be sustained at rates
seen so far this year (4-5%).
Domestic Passenger Load Factor by Country
Source: IATA
Passenger Load Factor on Domestic Market
Seasonally Adjusted
Source: LATA
Sep-13
82%
Sep-14
85%
82.6%
81.5%
80%
78.8%
80%
78.6%
77.5%
80.3% 79.6%
78.7%
79.1%
81.0%
79.0%
80.0%
75%
78%
% ASKs
% of ASKs
75.8%
76%
69.4%
69.3%
70%
70.4%
65%
60%
74%
55%
72%
50%
70%
2007
2008
2009
2010
2011
2012
2013
45%
2014
Australia
Brazil
China, P.R.
India
Japan
Russian
Federation
USA
Industry
Total Market (Domestic + International)
Total Passenger Market
Total Passenger Growth by Region
Source: IATA
Source: IATA
580
18%
Sep-14
15.3% 15.4%
14%
% Growth YoY in RPKs
Monthly RPKs (Billion)
Aug-14
16%
530
480
430
380
330
280
2007
Actual
Seasonally Adjusted
12%
10%
8%
6.4%
6.4%
7.2%
7.0%
6.3%
5.9%
6%
5.3%
4.3%
3.7%
4%
2.9%
3.1%
1.7%
2%
0%
2008
2009
2010
2011
2012
2013
Africa
2014
Asia/Pacific
Passenger Load Factor on Total Market
Latin
America
Middle East
North
America
Industry
Total Passenger Load Factor by Region
Source: LATA
Seasonally Adjusted
Source: IATA
81%
Europe
90%
Sep-13
80%
Sep-14
85%
82.9%
79%
83.9%
82.0% 82.4%
% of ASKs
% of ASKs
80.1% 80.3%
78%
77%
76%
80%
77.7%
78.8%
79.0%
77.1%
77.7%
78.4%
75%
71.9%
71.4%
70%
75%
65%
74%
60%
73%
2007
Africa
2008
2009
2010
2011
2012
2013
2014
Asia/Pacific
Europe
Latin
America
Middle East
North
America
Industry
Air Passenger Market Analysis
September 2014
ANNEX
Year on Year
Comparison
Sep 2014 vs Sep 2013
YTD 2014 vs. YTD 2013
RPK
ASK
PLF
RPK
ASK
PLF
Africa
1.8%
2.6%
70.5%
1.9%
4.5%
67.9%
Asia/Pacific
4.8%
7.2%
76.2%
5.8%
7.2%
77.2%
Europe
3.9%
2.6%
84.7%
5.8%
5.4%
82.2%
Latin America
4.6%
4.9%
79.9%
5.9%
4.5%
80.1%
Middle East
15.8%
14.9%
78.0%
13.4%
11.1%
79.7%
North America
2.1%
3.8%
82.4%
3.3%
4.7%
82.4%
International
5.3%
5.7%
80.5%
6.3%
6.5%
79.9%
Australia
2.7%
-1.3%
78.8%
2.2%
2.2%
76.0%
Brazil
4.0%
2.5%
78.6%
6.0%
0.5%
79.6%
China P.R.
8.6%
9.6%
79.6%
10.3%
11.1%
80.5%
India
26.3%
7.5%
81.5%
6.2%
7.4%
74.8%
Japan
2.0%
0.6%
70.4%
4.3%
0.8%
65.7%
Russian Federation
5.6%
5.1%
79.1%
10.5%
8.6%
76.9%
US
3.6%
1.7%
82.6%
2.4%
0.8%
85.4%
Domestic
5.3%
4.0%
80.0%
5.2%
4.3%
81.0%
Africa
1.7%
2.5%
71.4%
1.0%
3.7%
68.7%
Asia/Pacific
6.4%
7.3%
77.1%
6.9%
7.8%
77.4%
Europe
3.7%
2.5%
83.9%
5.9%
5.4%
81.5%
Latin America
4.3%
4.1%
79.0%
6.2%
3.5%
79.7%
Middle East
15.4%
14.3%
78.4%
13.0%
10.8%
80.0%
North America
3.1%
2.5%
82.4%
2.8%
2.2%
84.2%
Total Market
5.3%
5.1%
80.3%
5.9%
5.7%
80.3%
RPK: Revenue-Passenger-Kilometers; ASK: Available-Seat-Kilometers; PLF: Passenger-Load-Factor;
All Figures are expressed in % change Year on Year except PLFwhich are the load factors for the specific month.
Air Passenger Market Analysis
September 2014
Sep 2014 vs. Aug 2014
Market Share
Month on Month
Comparison
RPK
ASK
PLFpt
RPK
Africa
-1.3%
-0.5%
-0.6%
3.1%
Asia/Pacific
-0.5%
0.3%
-0.7%
25.6%
Europe
-0.4%
-0.8%
0.3%
40.5%
Latin America
-1.4%
0.7%
-1.7%
4.2%
Middle East
0.9%
1.8%
-0.7%
13.5%
North America
0.0%
-0.1%
0.1%
13.1%
International
-0.3%
0.1%
-0.3%
100.0%
Australia
-0.1%
0.1%
-0.3%
3.3%
Brazil
-1.2%
-0.1%
-1.1%
4.1%
China P.R.
1.3%
0.3%
0.7%
22.7%
India
10.3%
1.0%
7.3%
3.1%
Japan
0.1%
0.0%
0.1%
3.4%
Russian Federation
-1.0%
1.0%
-1.4%
4.4%
US
0.4%
0.5%
-0.1%
40.7%
Domestic
0.7%
0.2%
0.6%
100.0%
Africa
-1.3%
-0.6%
-0.5%
2.3%
Asia/Pacific
0.3%
0.3%
0.1%
30.2%
Europe
-0.5%
-0.7%
0.2%
29.5%
Latin America
-0.9%
0.2%
-0.8%
5.1%
Middle East
0.8%
1.7%
-0.7%
9.2%
North America
0.4%
0.3%
0.0%
23.6%
Total Market
0.1%
0.1%
0.1%
100%
Data are seasonally adjusted. All figures are expressed in % change MoM except,
FLFpt which are the percentage point difference between load factors of two months.
IATA Economics
E-Mail: [email protected]
TH
4 November 2014
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