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International air passenger traffic growth in 2018

Air travel growth eased in 2018 compared to the strong upward trend seen in 2017 but remained robust, while air freight growth moderated in 2018 after the sharp increase the previous year, according to figures released by the International Civil Aviation Organization (ICAO).

World passenger traffic, expressed in total scheduled revenue passenger-kilometers (RPKs), grew solidly at 6.7% and reached about 8.2 trillion RPKs performed last year, down from the 7.9% achieved in 2017.

A total of 4.3 billion passengers were carried by air transport on scheduled services in 2018, a 6.1% increase over 2017, as the number of departures rose to about 38 million globally last year.

Over half of the world’s 1.4 billion tourists who travelled across international borders last year were transported by air.

Moreover, air transport now carries some 35% of world trade by value. Indeed, around 90% of cross border business-to-consumer (B2C) e-commerce was carried by air transport, ICAO said in a new report.

The easing of air travel growth followed the increase in air fares due to the higher fuel prices from the last two years, reflecting the moderation in growth momentum. However, air traffic growth remained solid in 2018, underpinned by the global economic conditions throughout the year.

Int’l passenger traffic growth

International scheduled passenger traffic expressed in terms of RPKs grew by 6.4% in 2018, down from the strong 8.4% recorded in 2017. All regions posted slower growth than last year, except for an improvement in North America driven by the stronger U.S. economy and continued international expansion of Canadian carriers. The region carried 12% share of world international RPKs and recorded a rebound from the 4.9% in 2017 to 5.2% in 2018.

Asia-Pacific, the second largest international market with 30% RPK share, remained as the fastest growing region with an increase of 7.3%, albeit a moderation from the robust growth of 10.5% in 2017.

Europe recorded the second highest growth at 6.7% and was the largest international market with 37% share. This was followed by the 6.6% and 6.5% growth in Latin America/Caribbean and Africa, which accounted for the smallest RPK share of 4% and 3%, respectively. Carriers in the Middle East managed 14% of world international RPKs, and became the slowest growing region with a growth of 4.7%.

In terms of domestic scheduled passenger services, overall markets grew by 7.3% in 2018, slightly up from the 7.1% in 2017. This upward trend was helped by the strengthening in the domestic air travel demand in North America which accounted for 40% of the world domestic RPKs. The region demonstrated an increase in growth from 3.7% in 2017 to 5.4% in 2018.

In addition, Asia-Pacific, the world’s largest domestic market with 42% of traffic share, continued to grow double digitally at 10.4%, contributed by the strong demand in India and China, owing to their increasing GDP per capita and growing domestic air connectivity.

LCCs fly high

Notably, the low-cost carriers (LCCs) consistently grew at a faster pace than the world average growth, and its market share continued to increase, both in advanced and emerging economies.

In 2018, the LCCs carried an estimated 1.3 billion passengers, and accounted for about 31% of the world total scheduled passengers. Market share of LCCs was the highest in Europe representing 36% of total passengers carried in the region, followed by Latin America/Caribbean, North America, and Asia-Pacific with 35%, 30% and 29%, respectively.

Cargo slowdown

Meanwhile, after the sharp pick-up in air freight growth during the inventory restocking in 2017, air cargo traffic growth moderated in 2018. This coincided with the softening demand drivers impacted by the trade tension and declining import and export orders.

World scheduled freight traffic, measured in freight tonne-kilometers (FTK), grew modestly by 4.5% in 2018, compared to the 9.5% recorded in 2017. The international segment of freight traffic which represents nearly 87% of total air freight grew by around 4.6% while the scheduled international freight load factor remained at a similar level as last year at around 55%.

Record profit for 2018

In terms of financial results, the low fuel cost coupled with solid increase in traffic helped the airlines to maintain relatively high record of profitable level in 2018 albeit slightly lower from 2017.

The airline industry is expected to end 2018 with another record operating profit of around US$57 billion and an operating margin of 7.0%. The net profits for the industry is expected to be around $34 billion with nearly half of this being generated by air carriers of North America.

For this year, ICAO anticipates a less bright outlook. World real GDP growth is projected to be at 3.1% in 2018 before slowing gradually over the next two years, according to World Bank estimates.

“Advanced-economy growth decelerates and the recovery in major commodity-exporting emerging market and developing economies levels off. The financial market stress, escalating trade protectionism and heightened geopolitical tensions continue to cloud the outlook,” said ICAO.

“Deceleration in global economic growth forecasted by the World Bank could see moderation in traffic growth and profitability momentum in 2019,” it added.

Image courtesy of ICAO

 

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