The Aug-2019 passenger growth was on the back of a +3.5% year-on-year rise in capacity (available seat kilometres - ASKs). Load factor climbed 0.3 percentage points to 85.7%, which was a new monthly record, and highlights clearly that airlines are continuing to maximise aircraft asset use.
The performance, while encouraging, still sees growth below the long-term trend and well-down on the roughly +8.5% annual growth seen over the 2016 to Q1 2018 period. Alexandre de Juniac, IATA's director general and CEO says the performance reflects the impact of "economic slowdowns in some key markets, uncertainty over Brexit and the trade war between the US and China".
International passenger demand rose +3.3% year-on-year in Aug-2019, improved from a +2.8% growth achieved the month earlier. The IATA data shows that with the exception of Latin America, all regions recorded increases, led by airlines in Africa. Capacity climbed +2.9%, and load factor edged up +0.3 percentage point to 85.6%.
Demand for domestic travel climbed +4.7% in Aug-2019, unchanged from the previous month. Capacity rose +4.6% and load factor increased +0.1 percentage point to 85.9%. Notable, for different reasons, Australian airlines' domestic traffic slipped -0.4%, which was a reversal from a +0.7% annual increase in Jul-2019 as economic growth in Australia slipped to its lowest level in several years during the second quarter, while Russian airlines saw domestic traffic climb +6.0% - this was again down on the previous month (+6.8% in Jul-2019) and below the long-term average growth rate in the market of around 10%.
While the freight demand was down -3.9%, capacity (measured in available freight tonne kilometres - AFTKs), rose by +2% year-on-year in Aug-2019, meaning that capacity growth has now outstripped demand growth for the 16th consecutive month.
Air cargo is facing strong headwinds from the intensifying trade war between the US and China, as well as weakness in some of the key economic indicators and rising political uncertainties worldwide with global trade volumes are -1% lower than a year ago, according to IATA economists.
They highlight that trade in emerging countries has been underperforming that of advanced nations throughout most of 2019. This is due to higher sensitivity of the emerging economies to trade tensions, rising political instability and sharp currency depreciation in some of the key emerging markets.
Global export orders continue to fall. The global Purchasing Managers Index (PMI) remains in contraction territory. Its tracking of new manufacturing export orders has pointed to falling orders since Sep-2018. And for the second month in a row, all major trading nations reported falling orders.
This monthly performance shows the impact of the US-China trade war on air freight volumes "the clearest yet," says Mr de Juniac. "Not since the global financial crisis in 2008 has demand fallen for 10 consecutive months. This is deeply concerning. And with no signs of a détente on trade, we can expect the tough business environment for air cargo to continue," he warns.
Airlines in Asia-Pacific and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in Aug-2019, while North America and Europe experienced more moderate declines. Africa and Latin America both recorded growth in air freight demand compared to August last year.