Global air passenger traffic ‘to grow strongly’

Monday, 2 November 2015 00:00 -     - {{hitsCtrl.values.hits}}

Air passenger traffic volumes globally were up during the third quarter of this year, compared to the year ago period and despite weakness in some emerging market economies the numbers are expected to expand strongly, a survey said.

The results of International Air Transport Association’s (IATA) quarterly survey of airline CFOs and heads of cargo in October are consistent with the latest air transport data, which indicate that air travel is up 6-7% compared to a year ago, IATA said. This is stronger than the Q2 results.

The survey also suggests that growth in passenger volumes will continue in the coming months. But the share of respondents expecting an increase in passenger volumes in the year ahead has fallen further since earlier in the year. In April, the share of respondents expecting passenger growth during the next 12 months peaked at 79%, compared to 63% in the October survey.

Airline profit expectations for the year ahead have fallen further but remain positive, according to the survey. The rate of expected improvement in profitability over the next 12 months has fallen in October compared to Q1, suggesting that improvements in key drivers might have peaked earlier in the year.

Recent gains in profitability have been driven by strong growth in passenger volumes and falling input costs.

Respondents indicated that air freight volumes during the past three months were broadly unchanged compared to a year ago. This is a slowdown on previous quarters, and aligns with developments in FTK data.

The outlook for cargo volumes remains positive, but fewer respondents (50%) now expect gains in the year ahead compared to the January survey (71%), which was the 2015 peak of respondents’ optimism for cargo growth.

Expectations have weakened on the back of slower growth in world trade throughout H1 – with large declines in key markets like emerging Asia – as well as little improvement in global business confidence due to sluggishness in some emerging markets.

October survey results show that input costs were down in Q3 compared to the year ago period. This response is consistent with the relatively low crude oil and jet fuel prices. Crude oil prices averaged $ 52/bbl in Q3, some 55% down on mid-2014 highs. Survey respondents expect this trend to continue during the year ahead.

Survey respondents indicated that passenger yields in Q3 remained down on the year ago period, much the same as the trend so far this year. But further declines are not expected for the year ahead.