Middle East airlines record 9.2 per cent growth in passenger traffic for July

446Airlines in the Middle East recorded the strongest growth in passenger traffic at 9.2 per cent in July, benefitting from the strength of regional economies and solid growth in business-related premium travel, a report said.

The growth was ahead of a capacity expansion of 8.2 per cent, added the report released by the International Air Transport Association (Iata). The carriers recorded a load factor rise of 0.7 percentage points to 78 per cent.

African airlines reported growth of 4.9 per cent, reversing the year-on-year contraction experienced in June. With capacity rising 4.5 per cent, load factor improved slightly to 70.2 per cent.

The biggest factor impacting international traffic demand in July was the slowdown of the South African economy. The Ebola outbreak in West Africa intensified towards the end of July, the impact of which will likely be seen in August, Iata said in the report.

Globally, passenger traffic results for July showed demand growth of 5.3 per cent (measured in revenue passenger kilometres or RPKs) over July 2013. Capacity expanded exactly in tandem with demand (5.3 per cent), resulting in a global load factor of 82.3 per cent, unchanged from last year.

“July was another strong month of growth for air travel. People are connecting by air in ever greater numbers. That’s true across all regions. Despite the various economic challenges, the outlook for passenger travel remains broadly positive. The overall sluggishness at the beginning of the year appears to be behind us with growth in China and other emerging economies offsetting recent deterioration in the Eurozone,” said Tony Tyler, Iata’s director general and CEO.

July international passenger demand rose by 5.5 per cent compared to the same month in 2013. This was outstripped by a capacity expansion of 6.2 per cent which resulted in a slight weakening of the load factor to 81.9 per cent (down 0.5 percentage points from the year-ago period, but still at a very high level), said the Iata report.

European carriers reported growth of 5.3 per cent in July compared to a year ago. Capacity expanded slightly more aggressively at 5.6 per cent.

Demand growth among Asia-Pacific airlines was slightly above the global average at 5.6 per cent which lagged a capacity increase of 6.8 per cent. Load factor fell 0.9 percentage points to 78.9 per cent.

North American airlines saw international demand grow by 2.9 per cent–the slowest of all regions.

Demand on domestic routes rose by 4.9 per cent in July over the previous year, ahead of a 3.5 per cent capacity increase, pushing load factor up 1.1 percentage points to 83.0 per cent. The strongest growth was recorded in China (8.8 per cent) and Russia (9.9 per cent).

“Airlines reported growth in July, which is a positive story for the global economy. Robust economic conditions support the expansion of travel. In turn connectivity stimulates economic growth and creates jobs. It’s a tried and tested virtuous circle. And the expectation is for continued solid growth over the remainder of 2014,” said Tyler.

“We cannot ignore, however, the risks that could de-rail this trajectory. The Ebola outbreak in West Africa, weakness in the Eurozone, hostilities in Eastern Ukraine and instability in the Middle East loom large,” he continued.

“Airlines are on track to record a profit of some $18 billion this year. But that is a net profit margin of just 2.4 per cent which does not provide much of a buffer. So it is critical that governments shore-up connectivity with business friendly policies based on reasonable taxation, cost-efficient infrastructure and smart regulation,” concluded Tyler.

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