Strong Demand Growth Continues in June
- Asia-Pacific airlines’ June traffic jumped 9.1% compared to the year-ago period. Capacity rose 7.9% and load factor edged up 0.9 percentage points to 79.3%.The overall upward trend in seasonally-adjusted traffic remains strong, although volumes have slipped in recent months. Traffic on Asia-Europe routes continues to trend upwards following terrorism related disruptions in early 2016. However, solid demand growth on international routes within Asia has paused.
- European carriers saw traffic rise 8.8% in June compared to June 2016, which was up from a 7.5% year-over-year increase recorded in May. Capacity climbed 6.5% and load factor rose 1.8% percentage points to 85.9%, highest among the regions. The stronger growth reflects both a favorable comparison with the year-ago period, as well as increased momentum in the regional economic backdrop.
- Middle Eastern carriers posted a 2.5% traffic increase in June, which was a slowdown from the already subdued 3.7% growth seen in May. Capacity rose 3.1%, and load factor slipped down 0.4 percentage points to 68.9%. While most markets have seen demand slowing, it is most visible on the Middle East-North America market, which has been affected by a combination of factors including the (recently-lifted) ban on personal electronic devices, as well as a wider negative stimulation from the travel ban that has now been implemented for certain countries. However, passenger traffic between the Middle East and North America was already slowing in early 2017, in line with a moderation in the pace of growth of the largest carriers in the region.
- North American airlines’ demand rose 4.4% compared to June a year ago. Capacity climbed 4.1%, with load factor inching up 0.3 percentage points to 84.5%. The comparatively robust economic backdrop in North America is expected to continue to support outbound passenger demand. However, anecdotal evidence suggests that inbound tourism is being deterred by the additional security measures in place for travel to the US.
- Latin American airlines experienced a 9.7% rise in demand compared to the same month last year supported by strong travel within the region, while travel to North America is flat to down slightly. Capacity increased by 9.1% and load factor rose 0.4 percentage points to 82.1%.
- African airlines’ traffic soared 9.9% in June. Capacity rose 7.1%, and load factor jumped 1.7 percentage points to 64.3%, although this still was the lowest among regions. Conditions in the region’s two largest economies have continued to diverge, with business confidence in Nigeria rising sharply in recent months, while South Africa’s economy fell into recession in the first quarter.
- India led all markets with a 20.3% rise in domestic traffic in June. However, the very strong upward trend in traffic has slowed since the country’s unexpected ‘demonetization’ in November 2016. India’s streak of year-on-year double-digit traffic growth may have ended with June.
- China’s domestic traffic surged 17.6% in June, which was ahead of the first half growth rate of 15.2%. There continues to be little sign of any slowdown in the traffic trend and second quarter GDP figures were stronger than expected. Air travel demand is continuing to be stimulated by supply factors, including ongoing growth in the number of unique airport-pair routes served, which ultimately translates into time savings for passengers.
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