International air travel on Middle Eastern carriers rose 13.7% in August year-on-year, IATA has said in its latest air passenger market analysis.
This is a slowdown on July, but that month’s results showed a positive bias owing to the timing of Ramadan, it said.
Major economies in the Middle East, including Saudi Arabia and the United Arab Emirates, have seen slowdowns in non-oil sectors in Q2, 2015, but the rates of growth remain robust and this should help sustain solid growth in air passenger demand for local carriers.
According to IATA, global air travel rose 7.1% in August compared to a year ago. The previous few months of data showed some distortion from holiday impacts, but the August result confirms that the trend in air travel growth remains very strong, despite weakening economies in some regions.
There has been some softening in global economic growth, mostly in emerging markets, but there is no sign of adverse impacts on revenue passenger kilometres (RPK) volumes.
Growth in air travel, particularly the more price sensitive economy class leisure travel, has received some support from lower fares. The first chart below (RPKs adjusted for seasonal and holiday impacts) shows that after a moderation in volumes in June, the industry expanded in July and August to resume the robust growth trend seen earlier in the year.
International air travel growth for carriers in all major regions was strong in August. Asia Pacific, Europe and North America recorded gains of 7.7%, 5.7% and 4.5%, respectively year-on-year.
Emerging Asia has experienced notable declines in trade activity in 2015 as well as slower than expected growth in China. Neither factor appears to be impacting international air travel on the region’s carriers to date.
Economic recovery in the Eurozone and stronger demand conditions in H2 in the US are supporting international air travel on carriers in these regions.
On domestic markets, India continues to record very strong growth, up 18.3%, largely reflecting notable increases in service frequencies as well as ongoing economic strength.
By contrast, air travel in Australia rose just 1.7% in August year-on-year. There are signs of improvements in the economy with business activity increasing over recent months, but income growth remains relatively subdued.
Industry load factors increased for the second consecutive month in August, reaching an all-time high, IATA said.
The increase in seasonally adjusted load factors resulted from a strong pick-up in volumes that outstripped growth in capacity, and this is likely helping support asset utilization which is critical for financial performance in a capital intensive industry such as aviation.
“The global economic outlook has come under some downward pressure due to deepening weakness in emerging markets, particularly in China. But although there is no evidence of expected growth acceleration, there is still economic growth, and the fall in oil prices since mid-2014 is expected to sustain growth and demand for passenger travel in 2015,” IATA said.
