“Strong traffic demand continued throughout the first quarter, supported by a combination of lower fares and a broad-based upturn in global economic conditions. The price of air travel has fallen by around 10% in real terms over the past year and that has contributed to record load factors. We will have to wait another month to see the impact of the laptop ban on demand,” said Alexandre de Juniac, IATA’s Director General and CEO.
March international passenger demand rose 6.4% compared to March 2016, which was a slight deceleration compared to February, after adjusting for the leap year distortion in February. Airlines in all regions recorded growth. Total capacity climbed 6.1%, and load factor improved 0.2% percentage points to 78.8%.
European carriers saw March traffic climb 5.7% over March 2016. The strong upward trend in part is supported by momentum in the region’s economy. However, wide variation in performance exists among market segments. Demand across the Atlantic has grown only modestly, while RPKs flown on routes to and from Asia and the Middle East are up by around 7-9%. March capacity rose 4.7% and load factor edged up 0.8 percentage points to 82.2%, highest among regions.
Domestic demand rose 7.6% in March. This was driven primarily by double-digit traffic increases in China, India and Russia, supported by strong single-digit growth in Japan. Domestic capacity climbed 6.1%, and load factor lifted 1.2 percentage points to 83.2%.
Brazil’s domestic market continues to recover and returned to positive year-over-year growth in March for the first time since July 2015.
Japan’s domestic traffic growth hit a three-year high in March, continuing the ongoing recovery since spring 2016. This has come alongside an increase in the number of domestic routes flown (albeit with lower average flight frequencies).
The Bottom Line:
“The first quarter results are strong. But the last weeks have been challenging to the passenger business. The laptop ban—implemented with next to no notice, no dialogue and no coordination, is testing public confidence in how governments and industry work together to keep flying secure. So, even as rumors persist that the ban will be expanded to other airports and regions, we are calling on governments to work with the industry to find alternatives—to keep flying secure without such great inconvenience to our passengers,” said de Juniac.
Concurrently, the recent incident at United Airlines has created calls for more heavy-handed government oversight. “Everyone, including United, agrees there is no justification for what happened to passenger Dr. David Dao. United Airlines CEO Oscar Munoz has apologized repeatedly and is taking steps to ensure there is never a repeat.
“The video was so shocking that it would be easy for lawmakers and regulators to get caught up in this groundswell of outrage and take steps to limit overselling of flights. However, the management of overbooking has actually worked well for decades. It ensures that scarce capacity is efficiently utilized; we see that in today’s record load factors. Overbooking helps airlines avoid empty seats, and that helps to keep costs—and fares—low. Governments have acknowledged that this ultimately benefits consumers. And if industry-level change is discussed, let’s make sure that there is a transparent fact-based dialogue between industry and regulators. We must be careful to not risk undoing the many benefits unleashed by the competitive forces of deregulation,” said de Juniac.
View March passenger traffic analysis (pdf)