TravelBiz Monitor

Data & Analysis

Thursday, 18 July, 2019, 16 : 32 PM [IST]
Moderate Growth in RPK’s in May: IATA

Industry-wide revenue passenger kilometres (RPK) had recorded a significant growth of 4.5% year-on-year. However, the growth has slowed down over the recent months. With capacity increasing by a moderate 2.7% over the past year, the industry-wide load factor posted a new record high for May 2019. Except for the Middle East, all regions set new record levels. TravelBiz Monitor gives insights into the International Air Transport Association’s analysis for May.



The RPK growth trend has moderated
Industry-wide revenue passenger kilometres (RPKs) ticked marginally higher in May, up 4.5% in year-on-year (Y-O-Y terms. This is a solid outcome, following the short-lived dip in activity in March – where RPK growth eased to 3.1% Y-O-Y, in part due to the changed timing of Easter – but it remains below the long-term (20-year) average rate of around 5.5%. Looking through the regular seasonal volatility, the upwards trend in the level of RPKs continued this month. However, the trend has clearly moderated since around mid-2018.

The seasonally-adjusted (SA) data are consistent with an annualized RPK growth rate of around 4% currently, compared with a pace of around 7% in the early part of 2018.



……as global headwinds dampen demand
The slowing in the RPK growth trend in recent months comes as little surprise given the developments in a number of key indicators. The global Composite Purchasing Managers Index (PMI) has proven to be a reliable leading indicator of air passenger demand. The PMI eased further this month, continuing the downward trend observed over the past year or so and is now at a level not seen since 2016. This downward trend is consistent with the modest slowdown observed in global economic activity over a similar period. At its current level, the PMI suggests that RPK growth may moderate further over the near-term.



Air passenger market overview - May 2019
At the individual country level, the story is more mixed. Economic conditions are most positive in the Eurozone, UK (Brexit uncertainty notwithstanding), Australia and the ASEAN region. Unsurprisingly given recent outcomes, Brazil and South Africa are the two countries with the most challenging economic backdrop currently.



The growth rate of industry-wide available seat kilometres (ASKs) slowed further in May, increasing by a moderate 2.7% year-on-year. This represents the slowest rate of capacity growth in more than six years (since early 2013), as airlines respond to the moderation observed in air passenger demand. With capacity increasing more slowly than demand, the industry-wide load factor has increased by 1.4 percentage points over the past year. At 81.5% currently, this represents a record high outcome for any month of May.

This strong load factor performance was broadbased across the regions. All regions, with the exception of the Middle East, delivered record highs on this occasion.



Most notable was the 85.1% load factor recorded by the North American carriers, with Europe and Latin America not far behind, at 83.7% and 83.2%, respectively. Although the Middle East was the only region not to post a record-high passenger load factor, it is the only region to have reduced capacity over the past 12 months, with ASKs down a sizeable 5.9% Y-O-Y. In turn, this has increased the region’s passenger load factor by 4.8 percentage points compared with a year ago. Broad-based growth in international RPKs Industry-wide international RPKs (64% of total traffic) grew by 4.3% year-on-year in May, slightly slower than the global aggregate outcome and down from a 5.1% pace last month. All regions registered positive Y-O-Y growth on this occasion, yet only Latin America, Asia Pacific and Africa saw an increase in the rate of growth compared to April.



Asia Pacific and Africa growth lifts a little in May
International RPK growth accelerated from 2.9% year-on-year to 4.0% between April and May in Asia Pacific. This is the second consecutive increase, but it still represents a relatively soft outcome compared with the performance of recent years. The China-US trade tensions continue to weigh upon international RPK growth in the region. In Africa, international RPK volumes also grew slightly faster this month then they did in April – at a modest 2.1% Y-O-Y vs 1.1%. The region has barely increased capacity over the past year which has led to a 1.3 percentage point increase in the passenger load factor. Even so, at 67.0%, the region lags its counterparts on this measure.





 
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