Airlines see demand slow as capacity rises

Demand in Europe up 4.1% in November, capacity up 4.8%

The latest global air passenger traffic stats reveal that the pace of recent demand growth is slowing. The International Air Transport Association announced that total revenue passenger kilometres (RPK) rose 4.1% in November compared to the previous November – much slower than the 6.5% growth recorded in October.

Capacity expanded by 6.1% in November, outpacing demand and leading to a 1.4 percentage point slip in load factor to 76.3%.

But IATA noted that demand drivers such as consumer and business confidence continue to improve, suggesting that growth may accelerate again in the coming months.

“Demand growth hit a speed bump in November,” Tony Tyler, IATA’s director general and CEO, said. “But with continued modest improvements in economic conditions the outlook remains positive.”

Europe saw a similar trend, as demand for international services rose 4.1% in November while capacity expanded more quickly at 4.8%, leading to a 0.5 percentage point dip in load factor to 77%. Modest economic improvements and rising consumer and business confidence are supporting the growth in demand.

Asia-Pacific carriers recorded an increase in demand of 5.5%, supported by the stronger performance of major economies such as China and Japan. Capacity was up 6.8%, the load factor down 0.9 percentage points to 75.4%.

North American airlines saw demand rise 1.7%, a slowdown on October’s growth of 3.6%. Capacity rose 4.7%, causing load factor to fall 2.2 percentage points to 77.5%. Economic indicators there show a solid fourth quarter, despite the disruption of the government shutdown in October.

Middle East carriers saw demand growth of 9.7% in November, capacity growth of 12.8% and load factor of 72.1%. Latin American airlines experienced a 6.9% rise in demand, driven by the strong performance of economies such as Colombia, Peru and Chile. Capacity rose 3.6% and load factor climbed to 79.4%, the highest for any region.

Africa was the only region to see a decline in demand, as November traffic fell 2%, capacity climbed 2.6% and load factor fell to 63.5%.

Business Standard

[pictured: Delta Air Lines’ Business Elite seats; courtesy Delta Air Lines]

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