ICAO: Continued passenger growth, robust air cargo demand in 2017

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A record 4.1 billion passengers were carried by the aviation industry on scheduled services in 2017, while air cargo made a strong recovery last year, according to the latest figures released by the International Civil Aviation Organization (ICAO).

The record number of passengers indicates a 7.1% increase over 2016. The number of departures rose to about 37 million globally, and world passenger traffic, expressed in terms of total scheduled revenue passenger-kilometers (RPKs), posted an increase of 7.6% with some 7.7 trillion RPKs performed. This growth is a slight improvement from the 7.4% achieved in 2016, said ICAO.

“The sustainability of the tremendous growth in international civil air traffic is demonstrated by the continuous improvements to its safety, security, efficiency and environmental footprint,” remarked ICAO Council president Dr. Olumuyiwa Benard Aliu.

Over half of the world’s 1.2 billion tourists who traveled across international borders last year were transported by air, and air transport now carries some 35% of world trade by value. “Indeed, more than 90% of cross border business-to-consumer (B2C) e-commerce was carried by air transport,” ICAO noted.

Air travel demand growth has gained solid momentum, supported by the ongoing improvement in global economic conditions throughout the year. World real gross domestic product (GDP) growth is projected to be at 2.7% in 2017, an acceleration from the 2.4% in 2016, and is expected to further strengthen to 2.9% in 2018.

The upward trend was driven by the strengthening investment in advanced economies as well as the recovery in emerging market and developing economies owing to the increased export demand. The lower air fares owing to the low fuel price also continued to stimulate traffic growth, albeit at a more moderate level compared to 2016.

International scheduled passenger traffic expressed in terms of RPKs grew by 8.0% in 2017, up from the 7.8% recorded in 2016. All regions recorded stronger growth than in the previous year, except for a slowdown in the Middle East.

Europe remained as the largest international market with 37% share of world international RPKs, and grew strongly by 8.1%, supported by the improved economic conditions in the region. Asia/Pacific had the second largest share with 29%, and grew by 9.6%, the second strongest growth among all regions. North America accounted for a 13% share, and demonstrated an improvement compared to last year, but remained as the slowest growing region with a growth of 4.9%.

Carriers in Latin America and the Caribbean managed 4% of world international RPKs and saw the biggest improvement among all regions and recorded the strongest growth at 10.0%. Africa with the smallest share of 3% grew slightly faster than last year at 7.6%.

The low-cost carriers (LCCs) consistently grew at a faster pace compared to the world average growth, and its market share continued to increase, specifically in emerging economies. In 2017, the LCCs carried an estimated 1.2 billion passengers, and accounted for approximately 30% of the world’s total scheduled passengers. LCCs in Europe represented 33% of total passengers carried by LCCs, followed by Asia/Pacific and North America with 31% and 26%, respectively.

Surge in air cargo

Underpinned by the improving global economic conditions and world trade and boosted by increasing import and export orders, air cargo demonstrated a strong rebound in 2017.

World scheduled freight traffic, measured in freight tonne-kilometers (FTK), grew robustly by 9.5% in 2017, a significant improvement from the 3.8% growth registered in 2016. The international segment of freight traffic which represents nearly 87% of total air freight grew by around 10.3%, up from the 3.7% growth in 2016. The scheduled international freight load factor improved as well from around 53% in 2016 to 55% in 2017.

Average jet fuel prices increased by around 25% in 2017 compared to 2016, but remained significantly lower than the prices observed for the 10 years prior to 2016. This coupled with improvement in traffic helped the airlines to maintain their operating profit nearly at the same levels seen in 2016.

The airline industry is expected to end 2017 with another record operating profit of around US$60 billion and an operating margin of 8.0%. The net profits for the industry are expected to be around $36 billion with nearly 45% of this being generated by the air carriers of North America.

Improving economic conditions forecasted by the World Bank could see traffic growth and profitability momentum continuing in 2018, said ICAO.

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