Solid Passenger Demand, Record Load Factor in June; Air Freight in Decline for Eighth Consecutive Month

The International Air Transport Association (IATA) announced global passenger traffic results for June 2019 showing that demand (measured in revenue passenger kilometers or RPKs) rose by 5.0% compared to June 2018. This was up slightly from the 4.7% year-over-year growth recorded in May. June capacity (available seat kilometers or ASKs) increased by 3.3%, and load factor rose 1.4 percentage points to 84.4%, which was a record for the month of June.

“June continued the trend of solid passenger demand growth while the record load factor shows that airlines are maximizing efficiency. Amid continuing trade tensions between the US and China, and rising economic uncertainty in other regions, growth was not as strong as a year ago, however,” said Alexandre de Juniac, IATA’s Director General and CEO.

June international passenger demand rose 5.4% compared to June 2018, which was an improvement from 4.6% annual growth recorded in May. All regions recorded increases in growth, led by airlines in Africa. Capacity rose 3.4%, and load factor climbed 1.6 percentage points to 83.8%.
 

• European airlines saw traffic rise 5.6% in June compared to June 2018, in line with 5.5% demand growth the month before. Capacity climbed 4.5% and load factor rose 1.0% percentage point to 87.9%, tied with North America as the highest among the regions. The solid growth occurred against a backdrop of slowing economic activity and declining business confidence in the Euro area and UK. 
   
• Middle Eastern carriers posted an 8.1% demand increase in June compared to the same month last year, which was well up on the 0.6% annual increase recorded in May. The timing of Ramadan which fell almost exclusively in May this year likely contributed to the strongly contrasting outcomes. Capacity rose 1.7% and load factor jumped 4.5 percentage points to 76.6%.
   
• Asia-Pacific airlines’ June traffic rose 4.0% compared to the year-ago period, which was down from a 4.9% increase in May. US-China trade tensions have impacted demand in the broader Asia-Pacific-North America market and also within the inter-Asia market. Capacity rose 3.1% and load factor edged up 0.7 percentage point to 81.4%.  
   
• North American carriers’ demand rose 3.5% compared to June a year ago, down from 5.0% annual growth in May, similarly reflecting US-China trade tensions. Capacity climbed 2.0%, with load factor increasing 1.3 percentage points to 87.9%.
   
• Latin American airlines experienced a 5.8% rise in traffic compared to the same month last year, up slightly from 5.6% annual growth recorded in May. Capacity increased by 2.5% and load factor surged 2.6 percentage points to 84.0%. Weakening economic conditions in a number of key countries in the region could mean a softening in demand going forward.
   
• African airlines’ traffic soared 11.7% in June, up from 5.1% in May. Capacity rose 7.7%, and load factor jumped 2.6 percentage points to 70.5%. Demand is benefitting from a generally supportive economic backdrop, including improved economic stability in several countries, as well as increased air connectivity.

Domestic Passenger Markets

Demand for domestic travel climbed 4.4% in June compared to June 2018, which was a slight slowdown from 4.7% annual growth recorded in May. Led by Russia, all of the key domestic markets tracked by IATA reported traffic increases except for Brazil and Australia. June capacity rose 3.1%, and load factor climbed by 1.1 percentage points to 85.5%.

• Brazil’s domestic traffic fell 5.7% in June, which was a worsening from the 2.7% decline recorded in May. The sharp drop largely reflects the collapse of the country’s fourth largest carrier, Avianca Brasil, which had around a 14% market share in 2018.
   
• India’s domestic market continues to recover from the demise of Jet Airways, with demand rising 7.9% in June compared to the year-ago period.
   

The Bottom Line

“The peak summer travel season in the Northern Hemisphere is upon us. Crowded airports are a reminder of the vital role aviation plays in connecting people and commerce. For those traveling on journeys of discovery or reuniting with loved ones, aviation is the business of freedom. But aviation relies on borders that are open to trade and people to deliver its benefits. Ongoing trade disputes are contributing to declining global trade and slowing traffic growth. These developments are not helpful to the global economic outlook. Nobody wins a trade war,” said de Juniac. 

View the June Passenger Traffic Analysis (pdf)

CARGO

The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), decreased by 4.8% in June 2019, compared to the same period in 2018. This marks the eighth consecutive month of year-on-year decline in freight volumes.

Signs of a modest recovery in recent months appear to have been premature, with the June contraction broad-based across all regions with the exception of Africa. Capacity growth remains subdued and the cargo load factor continues to fall. Globally, trade growth is languishing, and business uncertainty is compounded by the latest tariff increases in the US-China trade dispute.

“Global trade continues to suffer as trade tensions—particularly between the US and China—deepen. As a result, air cargo markets continue to contract. Nobody wins a trade war. Borders that are open to trade spread sustained prosperity. That’s what our political leaders must focus on,” said Alexandre de Juniac, IATA’s Director General and CEO.

Regional Performance

Airlines in Asia-Pacific and the Middle East once again suffered the sharpest declines in year-on-year growth in total air freight volumes in June 2019. Africa was the only region to show any growth.
 

• Asia-Pacific airlines saw demand for air freight contract by 5.4% in June 2019, compared to the same period in 2018. Although an important factor, the US-China trade war is not solely responsible for the fall. FTKs for the within-Asia market have decreased more than 10% over the past year. Air freight capacity increased by 1.8% over the same period.  
   
• North American airlines’ freight demand decreased by 4.6% in June 2019, compared to the same period a year earlier. Capacity increased by 1.9% over the past year. US-China trade tensions are weighing on the performance, with FTKs to Asia down 5%. FTKs on routes to/from Europe, South America and Middle East were also lower.
   
• European airlines posted a 3.6% decrease in freight demand in June 2019 compared to the same period a year earlier. Comparatively strong cargo volumes within Europe are helping to minimize the impact of weaker German exports. Capacity increased by 2.8% year-on-year. 
   
• Middle Eastern airlines’ freight volumes decreased 7.0% in June 2019 compared to the year-ago period. Capacity increased by 2.7%. Seasonally-adjusted demand has been falling since late 2018, and the latest data show volumes to Europe (-7.2%) and Asia-Pacific (-6.5%) were particularly weak.  
   
• Latin American airlines experienced a decrease in freight demand in June 2019 of 1.0% compared to the same period last year and capacity increased by 4.6%. Much of the decline in traffic can be attributed to weakness in the within-South America market (especially Brazil and Argentina) where FTKs fell 6.5%. 
   
• African carriers were the only ones to report growth in June 2019, with an increase in demand of 3.8% compared to the same period a year earlier. This makes Africa the strongest performer for the fourth consecutive month. Capacity grew 16.6%. Route analysis shows that the Africa-Asia performance is strong—up 12% year-on-year

View June Air Freight Results (pdf)