Airline industry continues to deliver strong results, says IATA

GENEVA: The International Air Transport Association (IATA) announced global passenger traffic results for November 2016 showing the strongest demand growth in nine months.
Total revenue passenger kilometers (RPKs) rose 7.6 percent compared to November 2015. Capacity (available seat kilometers or ASKs) increased by 6.5 percent, and load factor rose 0.8 percentage points to 78.9 percent, according to an IATA statement.
“Stronger demand for air travel reflects — and is supporting — a pick-up in the global economic cycle. As the stimulus effect of lower oil prices recedes in the rear view mirror, the strength of the economic cycle will play a key role in the pace of demand growth in 2017,” said Alexandre de Juniac, IATA’s director general and CEO.
“The airline industry continues to deliver strong results,” said de Juniac.
“In 2017, for a third consecutive year, the industry’s return on invested capital will exceed the cost of capital,” he said.
“Passengers benefit from the industry’s success. Travel has never been more accessible — with great fares, many options and more destinations,” said de Juniac.
“Nevertheless uncertainty lies ahead. The threat of terrorism, questions over the durability of the economic upswing, rising oil prices and increasing protectionist rhetoric are among the concerns. The industry has reshaped itself and strengthened its resilience to shocks,” he said.
“We should see another solid year of collective profitability for the airlines in 2017. But we must be vigilant,” said the CEO.
International passenger markets
International passenger demand rose 8.0 percent in November compared to the year earlier, with airlines in all regions showing growth, according to the IATA. Total capacity climbed 6.8 percent, and load factor edged up 0.9 percentage points to 77.1 percent, it said.
Middle East carriers led all regions with a 12.2 percent demand increase. But the upward trend in the region’s seasonally adjusted traffic has paused, with November’s level coming in unchanged from that of July. Capacity rose 11.6 percent and load factor rose 0.3 percentage points to 68.7 percent.
European carriers saw demand increase by 8.3 percent in November 2016, while traffic grew at an annualized pace of 12 percent over the past five months or so. This suggests that the disruption caused by terrorism and political instability has lifted, against a backdrop of a growing Eurozone economy. Capacity rose 6.8 percent and load factor climbed 1.1 percentage point to 80.8 percent.
Asia-Pacific airlines’ November traffic also climbed 8.3 percent compared to the year-ago period. Capacity increased 7.1 percent and load factor rose 0.8 percentage points to 77.4 percent. The strong upward trend in demand has slowed recently but it is not clear whether this is a longer-term development or just a brief pause.