The global passenger demand growth has slackened in July due to tariffs, trade tensions and uncertainty surrounding Brexit, according to the IATA.
Total revenue passenger kilometres (RPKs) rose 3.6 per cent, compared to the same month in 2018, but down from the 5.1 per cent annual growth recorded in June. All regions posted traffic increases. Monthly capacity increased by 3.2 per cent and load factor rose 0.3 percentage point to 85.7 per cent, which is a new high for any month.
“July’s performance marked a soft start to the peak passenger demand season. Tariffs, trade wars, and uncertainty over Brexit are contributing to a weaker demand environment than we saw in 2018. At the same time, the trend of moderate capacity increases is helping to achieve record load factors,” said Alexandre Juniac, IATA’s director general and CEO.
This July, international passenger demand rose 2.7 per cent compared to July 2018, which was a deceleration compared to the 5.3 per cent growth recorded in June. Capacity climbed 2.4 per cent, and load factor edged upward 0.2 percentage point to 85.3 per cent. All regions reported growth, led by airlines in Latin America.
Asia-Pacific airlines’ July traffic rose 2.7 per cent over the year-ago period, a slowdown compared to June growth of 3.9 per cent and their weakest performance since early 2013. Capacity increased 2.4 per cent and load factor rose 0.2 percentage point to 82.6 per cent.
US-China and Japan-South Korea trade tensions as well as political tensions in Hong Kong have all weighed on business confidence, said IATA.
European carriers registered a modest 3.3 per cent annual growth in July, down from a 5.6 per cent year-over-year increase in June. This was the slowest rate of growth since mid-2016. According to IATA, continuing uncertainty over Brexit and slowing German exports and manufacturing activity contributed to a weakening in business and consumer confidence. Capacity rose 3.2 per cent, and load factor climbed 0.1 percentage point to 89.0 per cent – highest among the regions.
Middle East carriers had a 1.6 per cent increase in demand for July, well down on the 8.3 per cent growth recorded for June, after the end of Ramadan. Weakness in global trade, volatile oil prices and heightened geopolitical tensions have been negative factors for the region, said IATA. July capacity climbed 1.0 per cent compared to a year ago and load factor rose 0.4 percentage point to 81.3 per cent.
North American airlines’ traffic climbed 1.5 per cent compared to July a year ago. This was down from 3.5 per cent growth in June, reflecting the slowdown in the US and Canadian economies and the trade disputes. July capacity rose 0.7 per cent with the result that load factor climbed 0.7 percentage point to 87.9 per cent – second highest among the regions.
Latin American airlines experienced a 4.1 per cent rise in traffic in July, which was the strongest growth among the regions but a decline from 5.8 per cent year-over-year growth in June. It occurred amid continued disruption following the demise of Avianca Brasil and more challenging business conditions in some key regional economies. Capacity rose 2.7 per cent and load factor climbed 1.1 percentage points to 85.6 per cent.
African airlines’ July traffic rose 3.6 per cent – a significant decline from the 9.8 per cent growth recorded in June, as weakening business confidence in South Africa offset solid economic conditions elsewhere on the continent. Capacity rose 6.1 per cent, and load factor slipped 1.7 percentage points to 72.9 per cent.
Domestic travel demand outperformed international growth in July, as RPKs rose 5.2 per cent in markets tracked by IATA, up from the 4.7 per cent growth in June. Domestic capacity climbed 4.7 per cent, and load factor rose 0.4 percentage point to 86.5 per cent.
China’s domestic traffic rose 11.7 per cent in July – an acceleration over the 8.9 per cent growth recorded in June and the strongest domestic performance. Growth is benefitting from lower fares and more connections.
Japan’s domestic traffic climbed 4.7 per cent in July, up from 2.6 per cent in June. Business confidence and economic growth are relatively positive at the moment.