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IATA Passenger Analysis Dec2013

IATA Passenger Analysis Dec2013

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The International Air Transport Association (IATA) announced full-year traffic results for 2013 showing a 5.2% increase in passenger demand compared to 2012. The 2013 performance aligns with the average annual growth rate of the past 30 years. Capacity rose 4.8% and load factor averaged 79.5% up 0.4 percentage points over 2012.
The International Air Transport Association (IATA) announced full-year traffic results for 2013 showing a 5.2% increase in passenger demand compared to 2012. The 2013 performance aligns with the average annual growth rate of the past 30 years. Capacity rose 4.8% and load factor averaged 79.5% up 0.4 percentage points over 2012.

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AIR PASSENGER MARKET ANALYSIS

DECEMBER 2013
KEY POINTS
 Air travel markets expanded at the average growth rate for the past 30 years in 2013, gaining 5.2% compared to 2012, despite high fuel costs and relatively slow global economic growth. Growth in air travel was driven by solid economic expansion in emerging regions, where less mature air travel markets continue to increase strongly.  International air travel results show that airlines in mature markets of Europe and North America experienced the slowest rates of expansion in 2013, rising 3.8% and 3.0% respectively. While economic performance in both regions picked-up in 2013, supporting some recovery in air travel growth, the pace of expansion was far slower than in emerging market regions. Carriers in the Middle East recorded the strongest increase in 2013, gaining 12.1% compared to 2012, reflecting strength of regional economies and solid growth in business-related premium travel. Airlines in Latin America saw growth of 8.1% in 2013, also reflecting strong performance of several local economies and continued expansion of trade activity, which has supported business-related international air travel.

 Domestic air travel increased by a strong 4.9% in 2013, with China and Russia recording the strongest rates of increase. Air travel in China expanded 11.7% in 2013, and although this is a slowdown on 2012, it is the strongest performing domestic market, buoyed by robust domestic demand. Air travel in Russia has been supported by the government’s policy to sustain employment and incomes, with domestic RPKs expanding 9.6% in 2013. By contrast, other BRIC states – Brazil and India – have seen considerably slower rates of growth in domestic travel, 0.8% and 4.0% respectively. Both countries have been plagued by continued economic weakness, which has placed considerable downward pressure on air travel demand growth.  Load factors were broadly stable overall in 2013 compared to levels in 2012, remaining high at close to 80%. Domestic and international load factors both showed weakness mid-year, but that weakness appears to have reversed in Q4, supported by the solid increases in volumes.

 The demand environment for air travel remains broadly positive, supported by recent improvements in the global economy, including in advanced markets like the US and Eurozone. Business confidence is rising and acceleration in world trade should continue to support growth in international air travel as well as business-related premium travel, which bodes well for airline profitability.

Total Air Freight and Passenger Volumes
Source: IATA (Seasonally Adjusted)
490 17

Worldwide growth in air travel and business confidence
Source: IATA, JP Morgan/Markit 65 15%

Index of business confidence

470

60 55 50 45 40
Business Confidence

16

10%

Monthly FTK (Billions)

Monthly RPK (Billions)

450 430 410 14 390 370 Revenue Passenger Kilometers (RPKs) 350 330 2007 Freight Tonne Kilometers (FTKs) 11 2008 2009 2010 2011 2012 2013 15

5%

0%

-5%

35 30 25 2007

13

Growth in RPKs

-10%

-15% 2008 2009 2010 2011 2012 2013

Year on Year Comparison Dec 2013 vs. Dec 2012 2013 vs. 2012
RPK ASK PLF RPK ASK PLF

Month on Month Comparison Dec 2013 vs. Nov 2013
RPK ASK PLFpt

International Domestic Total Market

6.2% 7.4%

5.9% 6.2%

78.2% 79.4%

5.4% 4.9%

4.9% 4.6%

79.3% 79.9%

1.6% 1.6% 1.6%

0.6% 0.6% 0.6%

0.8% 1.0% 0.8%

6.6%

6.0%

78.7%

5.2%

4.8%

79.5%

FTK: Freight-Tonne-Kilometers; AFTK: Available Freight Tonne Kilometers; FLF: Freight Load Factor. All Figures are expressed in % change Year on Year except FLF which are the load factors for the specific month.

Data are seasonally adjusted. All figures are expressed in % change MoM except, FLFpt which are the percentage point difference between LF of two months.

% change over year

Air Passenger Market Analysis December 2013

PASSENGER MARKET
International Markets
International Passenger Market
Source: IATA 350 330
16% 14% 12%
13.9%
Nov-13 Dec-13

International Passenger Growth by Region
Source: IATA

Monthly RPKs (Billion)

% Growth YoY in RPKs

310 290 270 250 230 210 190 170 2007 2008 2009 2010 2011 2012 2013
Actual Seasonally Adjusted

10% 8% 6% 4%
2.1% 5.0% 4.7% 5.2% 4.2% 6.9% 7.3%

9.3%

6.2% 5.1% 4.6%

2% 0% -2% -4%
-2.3%

1.7%

Africa

Asia/Pacific

Europe

Latin America

Middle East

North America

Industry

 International air travel recorded robust growth in 2013, rising 5.4% compared to 2012. December was a particularly strong month, with a 6.2% increase year-on-year and a 1.6% expansion in volumes month-on-month. In fact the significant rise in international RPKs in December compared to November helped load factors rebound, gaining 0.8% pts. over the month. This result has reversed the weakening in international load factors seen during recent past months.  International air travel results show that airlines in mature markets of Europe and North America experienced the slowest rates of expansion in 2013, rising 3.8% and 3.0% respectively. While economic performance in both regions picked-up in 2013, supporting some recovery in air travel growth, the pace of expansion was far slower than in emerging market regions. Modest economic improvements in the Eurozone since Q2 and rising consumer and business confidence have been providing a stronger demand base for international air travel. The services sector signaled expansion for a fifth month in December, according to JPMorgan/Markit, and after weakness in previous months, job losses in the Eurozone stabilized in December. If business activity continues to grow, employment and consumer demand could see some improvement in the New Year, providing sustained support to air travel demand. In the US, recent economic indicators have shown a solid fourth quarter, with manufacturing and services sector activity expanding at a rate only marginally slower than Q3, despite the disruption caused by the government shutdown in October. Moreover, employment growth has picked-up as has growth in consumer spending, both of which are critical to air travel demand.

 Carriers in the Middle East recorded the strongest increase in 2013, gaining 12.1% compared to 2012, supported by continued strength of regional economies and solid growth in business-related premium travel, particularly to developing markets like Africa. Internationally trading industries will likely continue to see sustained growth as export orders suggest further gains in trade ahead. Solid performance of key economies like Saudi Arabia and the United Arab Emirates has also supported strong expansion in both business and leisure travel to regions such as Europe.  Growth in international travel on Latin American carriers was also strong in 2013, gaining 8.1% compared to 2012. Airlines in this region have also experienced robust growth in business related travel throughout 2013, driven by strong performance of economies like Colombia, Peru and Chile. Markets including North America – Latin American have recording robust growth this year, for both business and leisure travel.  Asia Pacific airlines experienced a rise of 5.3% for the year as a whole, in line with performance in 2012. Carriers in the region saw a pick-up in demand in Q3, supported by stronger performance of major economies like China and Japan. Economic growth in China picked up toward the end of H1, benefitting other major Asian economies and providing a boost to regional trade volumes, which had incurred significant declines mid-year. In Japan, continued increases in business activity have supported economic performance and helped employment grow for 5 consecutive months. These developments in turn have helped support business-related air travel within the region and to connecting markets. During Q4, however, there was little further expansion in Asia Pacific airlines’ international FTKs, which could dampen growth momentum in the New Year.

 African airlines international air travel expanded by 5.5% in 2013, a solid result but slower than growth in 2012 (7.5%). Overall, the demand backdrop for carriers in the region is strong, with robust economic growth of local

Air Passenger Market Analysis December 2013

economies and continued development of internationally trading industries. But some parts of the continent have shown weakness, including the South African economy which has recently experienced a slowdown. There has also been some slowdown in regional trade growth. These developments have placed downward pressure on growth in demand for international air travel, which slowed in H2 2013 compared to earlier in the year.

Passenger Load Factor on International Market
Seasonally Adjusted 81% 80% 79% 78% 77% 76% 75% 74% 73% 72% 2007 2008 2009 2010 2011 2012 2013

International Passenger Load Factor by Region
85%
Dec-12 Dec-13

Source: IATA

Source: IATA
83.2% 81.8% 79.7% 78.0% 76.9% 77.8% 78.5% 75.7% 77.7% 77.5% 78.0% 78.2%

80%

% of ASKs

% ASKs

75%
70.6%

70%

69.8%

65%

60% Africa Asia/Pacific Europe Latin America Middle East North America Industry

Domestic Market
Domestic Passenger Market
200 190 180

Source: IATA
12%

Domestic Passenger Growth by Country Source: IATA
Nov-13 Dec-13

10.3%

10%

9.8% 9.3%

Monthly RPKs (Billion)

% Growth YoY in RPKs

170 160 150 140 130 120 110 2007 2008 2009 2010 2011 2012 2013
Actual Seasonally Adjusted

8%
6.2%

7.4%

7.4%

6%
4.5% 4.2% 3.7% 3.1% 2.5% 2.0%

5.5%

4% 2% 0% -2%
-1.0%

3.1%

-1.2%

Australia

Brazil

China, P.R.

India

Japan

Russian Federation

USA

Industry

 Domestic RPKs were up 4.9% in 2013 compared to 2012, reflecting steady growth throughout the year, and a solid pick up in volumes toward the end of 2013, including a rise of 1.6% in December compared to November. Domestic market load factors reached 79.9% overall in 2013, a solid result reflecting a strong rebound in Q4, supported by the rise in volumes.  Domestic air travel in China and Russia recorded the strongest rates of increase. Air travel in China expanded 11.7% in 2013. It is the strongest performing domestic market, buoyed by robust domestic demand.  Demand for air travel in Russia is being supported by a resilient labor market; with government policy firmly set to maintain high employment and sustained income levels. Russian domestic air travel volumes expanded 9.6% in 2013.  By contrast, other BRIC states – Brazil and India – have seen considerably slower rates of growth in domestic travel, 0.8% and 4.0% respectively. Tax breaks and investment incentives have done little to boost growth in the Brazilian economy, dampening domestic consumption. But moves by airlines to cut capacity have helped improve load factors, which finished the year at 76.3%, well above 2012 (71.8%). In India, the demand backdrop has been difficult with the economy weakening over the past two years, showing high inflation and slowing manufacturing and mining industries.  Japan’s domestic air travel market improved significantly in 2013, expanding 5.2%. The Japanese economy accelerated in the first half of 2013 on the back of significant government stimulus and that has supported increases in business activity and improving employment rates, all of which have boosted demand for air travel.  In the US, domestic air travel expanded 1.9% in 2013, which is more than double the pace of growth in 2012. The improvement reflects sustained increases in consumer confidence throughout the year as well as rising employment activity, particularly over recent months. In December, the US domestic market was up 7.4% compared to a year ago, but this result is positively impacted by Thanksgiving traffic moving into December.

Air Passenger Market Analysis December 2013

 Australia domestic market recorded growth of 2.8% in 2013. Despite interest rate cuts, the economy remains broadly sluggish with rising unemployment and fragile business and consumer confidence tainting the performance outlook for the coming year.

Passenger Load Factor on Domestic Market
Seasonally Adjusted
Source: IATA

Domestic Passenger Load Factor by Country Source: IATA

82% 81% 80% 79%

90% 85% 80%
76.9%

Dec-12

Dec-13

85.4% 82.8% 78.2%78.1% 76.1% 78.3% 76.4% 74.2% 81.8% 78.5% 79.4%

% of ASKs

% ASKs

78% 77% 76% 75% 74% 73% 72% 71% 2007 2008 2009 2010 2011 2012 2013

75% 70% 65%

68.2% 66.9% 62.2%

60.9%

60% 55% 50% 45%
Australia Brazil China, P.R. India Japan Russian Federation USA Industry

Total Market (Domestic + International)
Total Passenger Market
Source: IATA
16%
530

Total Passenger Growth by Region
Source: IATA

14% 12%

13.2%

Nov-13

Dec-13

Monthly RPKs (Billion)

480

% Growth YoY in RPKs

10% 8%
6.2% 6.3% 5.2% 4.4% 6.6% 7.1%

9.0% 6.5% 6.6%

430

6% 4% 2% 0%
1.3%

4.1%

380

330
Actual Seasonally Adjusted

-0.3%

-2% -4%
-3.1%

280 2007 2008 2009 2010 2011 2012 2013

Africa

Asia/Pacific

Europe

Latin America

Middle East

North America

Industry

Passenger Load Factor on Total Market
Seasonally Adjusted 81% 80%

Source: IATA
90%
Dec-12

Total Passenger Load Factor by Region Source: IATA
Dec-13

85%
79%
81.8%

84.5%

% of ASKs

% of ASKs

78% 77% 76% 75%

80%
77.5% 76.2% 76.7% 77.3% 76.8%

79.1%

77.9%

77.9%

78.2%

78.7%

75%
71.1% 70.3%

70%

65%
74%

60%
73% 2007 2008 2009 2010 2011 2012 2013

Africa

Asia/Pacific

Europe

Latin America

Middle East

North America

Industry

Air Passenger Market Analysis December 2013

ANNEX
Year on Year Comparison
RPK

Dec 2013 vs Dec 2012
ASK PLF RPK

2013 vs. 2012
ASK PLF

Africa Asia/Pacific Europe Latin America Middle East North America

2.1% 4.7% 5.2% 7.3% 13.9% 5.1% 6.2% 2.5% 4.2% 9.8% 3.1% 6.2% 5.5% 7.4% 7.4% 1.3% 6.3% 5.2% 7.1% 13.2% 6.5% 6.6%

3.3% 6.1% 4.4% 1.9% 14.2% 3.3% 5.9% 3.6% 4.3% 12.6% 15.1% 3.9% 7.6% 2.9% 6.2% 2.5% 8.2% 4.4% 4.1% 13.2% 3.1% 6.0%

69.8% 76.9% 78.5% 79.7% 77.5% 83.2% 78.2% 76.1% 78.1% 76.4% 74.2% 62.2% 66.9% 85.4% 79.4% 70.3% 76.2% 77.3% 79.1% 77.9% 84.5% 78.7%

5.5% 5.3% 3.8% 8.1% 12.1% 3.0% 5.4% 2.8% 0.8% 11.7% 4.0% 5.2% 9.6% 1.9% 4.9% 5.1% 7.1% 3.8% 6.3% 11.4% 2.3% 5.2%

5.2% 5.2% 2.8% 7.4% 12.8% 2.2% 4.9% 3.8% -3.3% 12.2% 3.5% 5.1% 9.1% 1.9% 4.6% 4.5% 7.1% 2.7% 4.5% 12.0% 2.0% 4.8%

69.0% 77.7% 81.0% 79.2% 77.3% 82.8% 79.3% 76.5% 76.3% 80.3% 74.6% 64.3% 74.0% 83.8% 79.9% 69.9% 77.6% 80.2% 78.0% 77.6% 83.4% 79.5%

International
Australia Brazil China P.R. India Japan Russian Federation US

Domestic
Africa Asia/Pacific Europe Latin America Middle East North America Total Market

RPK: Revenue-Passenger-Kilometers; ASK: Available-Seat-Kilometers; PLF: Passenger-Load-Factor; All Figures are expressed in % change Year on Year except PLFwhich are the load factors for the specific month.

Air Passenger Market Analysis December 2013

Month on Month Comparison
RPK

Dec 2013 vs. Nov 2013
ASK PLFpt

Market Share
RPK

Africa Asia/Pacific Europe Latin America Middle East North America

3.9% 1.4% 1.2% 0.7% 1.8% 2.7%
1.6% 1.4% -1.6% 1.5% -0.5% 2.4% -0.1% 2.5% 1.6%

1.9% 0.8% 0.3% 0.4% 1.0% 0.0%
0.6% 0.0% 1.7% 1.1% 1.7% 0.4% -0.1% 0.1% 0.6%

1.4% 0.5% 0.7% 0.2% 0.5% 2.2%
0.8% 1.4% -3.2% 0.3% -1.5% 1.3% 0.1% 2.1% 1.0%

3.5% 29.3% 33.8% 5.0% 14.2% 14.3%
100.0%

International
Australia Brazil China P.R. India Japan Russian Federation US

3.4% 4.4% 20.3% 2.9% 3.1% 3.1% 44.9%
100.0%

Domestic
Africa Asia/Pacific Europe Latin America Middle East North America Total Market

3.7% 1.4% 1.1%
0.1% 1.6% 2.5% 1.6%

1.8% 1.0% 0.2%
0.7% 1.0% 0.1% 0.6%

1.3% 0.4% 0.7%
-0.4% 0.5% 2.0% 0.8%

2.6% 31.9% 23.9% 6.0% 9.3% 26.4% 100%

Data are seasonally adjusted. All figures are expressed in % change MoM except, FLFpt which are the percentage point difference between load factors of two months.

IATA Economics E-Mail: economics@iata.org TH 6 February 2014

FURTHER ANALYSIS AND DATA Access data related to this briefing through the Route Tracker publication: www.iata.org/carrier-tracker

NEW RELEASE ALERTS To receive email notification of new analysis from IATA Economics, select ‘Economic Briefings’ from: www.iata.org/optin

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