IATA PREMIUM TRAFFIC MONITOR MAY 2013 KEY POINTS Air travel markets showed signs of deterioration in May. The number of passengers traveling in premium seats on international markets was 2.0% higher in May compared to a year ago, a slowdown on the April result of 3.8%. Economy class passenger travel rose at a faster pace, up 3.9% in May year-on-year, close to the 4-5% growth in April after adjusting for the timing of Easter. The size of the international premium passenger market contracted in May and April, as presented in the first chart below. This has led to a slip in the share of premium passengers from total international travel, as seen in the second chart below, which could undermine yields if the trend continues. Growth in international passenger numbers is expanding at a slower rate so far this year than growth in international air travel, taking distance into account (revenue passenger kilometers). In 2012, international passenger numbers and international RPKs increased at 5.8% and 6.0%, respectively. In May international passenger numbers were up 3.7% on a year ago, while international RPKs were 5.7% higher. The reason for this difference is that the mix of short haul and long haul traffic has changed. Medium and long haul routes are contributing more to total growth in international air travel so far this year than they did in 2012. This is partly because some medium and long haul routes are growing at a faster pace this year, but also because growth on major short haul markets has slowed over recent months. Air travel on the major long haul North Atlantic route has remained weak throughout 2013, but strong growth on other medium to long haul routes have been driving an increasing share of overall growth in air travel, including Europe – Middle East, Europe – Far East and North America – South America. At the same time, air travel growth within Europe and within Far East has slowed. More specifically, travel on medium to long haul routes that are connected to emerging markets continue to contribute most to growth in air travel. Long-haul passengers connecting through Middle East hubs help support strong growth on markets like Europe-Middle East, which was up 8.5% and 17.2% in premium and economy travel in May. Strength in South American economies is supporting business and leisure travel on the North America –South America market, which recorded growth of 10.7% and 11.5% in premium and economy travel. Performance on short haul travel within the Far East was weak again in May, with premium and economy travel up just 2.7% and 0.8%, likely reflecting sluggishness in the Chinese economy, which continues to impact regional performance. Over recent months, indicators have started to suggest that drivers of business and other air travel are weakening. While business confidence still indicates modest growth, levels have been flat since early 2013. Moreover, export orders have declined, signaling slow growth in world trade. Air travel growth is unlikely to accelerate in the near term; growth is expected to trend at current rates.
Posted on: Wed, 17 Jul 2013 11:28:37 +0000