Mideast carriers gaining from strong demand

International air travel on Middle Eastern airlines is expanding at a rate well above the global pace, with a growth of 12.1 percent, the International Air Transport Association (IATA) says in its latest report .
Domestic air travel was up in all markets again in June, IATA said.
Global revenue passenger kilometers (RPK) were up 6.0 percent in June compared to a year ago, slightly up on May growth of 5.8 percent.
For Middle Eastern airlines, the strategy to increase network and capacity has been met with strong demand, since the convenient location facilitates development of trade links with Africa and Asia as well as economic activity between those two regions.
African air travel has also benefited from growing domestic demand, with Ghana, Nigeria, Ethiopia and the Democratic Republic of Congo posting some of the fastest GDP growth rates globally.
Regional airlines have also made steady progress with load factors through tighter capacity management over the year.
Although African airlines still trail the global average load factor by about 10 percentage points, they continued to make solid progress each month in 2013 compared to the year ago period. In June, load factors on international air travel improved by almost 3 percent points compared June 2012.
Finally, international air travel on Latin American carriers is receiving support from strong business-related travel demand, with the region posting
the strongest trade growth momentum in Q2 compared to any other region.
Global air travel volumes showed an accelerated rate of increase in June. While current levels of business confidence and emerging market growth support air travel expansion at the rate seen so far this year (4.8 percent), there is little evidence to explain the acceleration in growth in June.
Business confidence showed no change in June compared to May and trade growth in advanced economies remains weak.
The acceleration in air travel growth in June has been caused by a pickup in RPKs for Asia-Pacific airlines, who carried half of the global rise in air travel in June compared to May.
However, the recent performance of Asia-Pacific carriers and the slowdown in China’s economy and Asian trade this year suggests this is a result of
volatility in travel volumes rather than acceleration in the growth trend. Growth in Asia-Pacific international RPKs has been 3.6 percent year-to-date, down on the +5 percent expansion in 2012.
Airlines in other emerging regions continue to post the strongest results in international air travel, supported by continued growth in trade activity. International air travel on Middle Eastern, African and Latin American airlines is expanding at rates well above the global pace, with growth of 12.1 percent, 11.2 percent and 8.7 percent, respectively.
European airlines recorded a second month of solid growth in international RPKs, up 4.7 percent in June compared to a year ago. This is consistent with recent improvements in European consumer and business confidence.
China’s market remains strong, up 14.6 percent on a year ago, despite reported slowdowns in economic growth in H1.
Air travel in Japan continues to reflect current improvements in economic performance, with growth of 6.9 percent in June on a year ago. The market has now recovered to pre-tsunami levels.
Air travel within Brazil is the only market to show a decline year-to-date, reflecting a combination of sluggish growth and significant capacity cuts by local airlines.
Passenger load factors reached a new record high in June, slightly above 80 percent on a seasonally adjusted basis.
Airlines in all regions achieved higher load factors over the month, consistent with strong growth in demand.
Tighter capacity management has helped African airlines record some of the biggest increases in load factors.
Global business confidence continues to flatline, but a recent easing in the rate of decline in the Eurozone could help reduce downward pressure on global growth.
Nonetheless, the Eurozone remains in recession and while continued growth in emerging markets should sustain growth in air travel, acceleration is unlikely in the near-term.