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Oct 03 2013

Mideast airlines flying high on passenger, capacity growth

By Santhosh V Perumal Middle East carriers have reported the highest growth in passenger traffic and capacity available to generate earnings in their international routes in August, much higher than global average, according to the International Air Transport Association (Iata).

The carriers' revenue per kilometer (RPK) grew 15.1% year-on-year (y-o-y) in August compared with the global average of 7.5%, Iata said in its latest report.

Capacity expansion, which is available-seat-per-kilometer (ASK), was held to 10.8%, pushing up load factor (PLF) 3.1 percentage points to 82.0%, it said.

"The strong demand trend is expected to continue, with August data showing solid progress in non-oil producing sectors in countries such as Saudi Arabia and the UAE," the report said.

On the global front, it said international air travel recorded a strong rise in August compared to a year ago, up 7.5%. This is an improvement on July growth of 4.6%, and notably above year-to-date growth of 5.2%. "There was solid increase in the monthly growth trend in August, with volumes expanding 1.2% compared to July, reflecting recent improvements in the demand environment," it said.

After Middle Eastern carriers, stood Latin American airlines with 9.8% and 7.6% growth in RPK and ASK on 80.8% PLF. Developments in the region's largest economy, Brazil, do not seem to be hampering international air travel for regional airlines, it noted.

Although Brazil continues to face "deteriorating" business confidence, Colombia, Peru and Chile are expanding strongly, Iata said, adding the region also continues to record solid growth in trade volumes, particularly exports, well above the global trend.

Since world trade is associated with international trading industries, which rely on air travel to facilitate their business development, air travel demand stands to benefit when trade expands, Iata added.

Asia/Pacific carriers witnessed 8.6% and 6.3% growth in PRK and ASK on 81.6% PLF.

African carriers witnessed 5.4% growth y-o-y in RPK and 6.5% in ASK on a 70.9% PLF and Europe saw 5.4% and 3.7% growth in RPK and ASK on 86.4% PLF.

In Europe, modest economic improvements and rising consumer confidence supported a 5.4% rise in international RPKs, it said.

The "cautiously optimistic" outlook for the second half (Q2) of 2013 for the eurozone remains intact so far - business confidence continues to show improvement with the third quarter shaping up to be the strongest period of manufacturing activity since Q2 2011, and export orders show further increase reaching a 27-month high in August, according to Iata.

North American carriers registered 5.1% in RPK and 4% in ASK on an 88.1% PLF. This is consistent with recent indicators, which suggest a more supportive business environment.

However, while manufacturing activity has started to improve in Q3, it remains below the average seen at the start of the year, meaning "there is still some progress to be made before we see significant acceleration in demand," Iata said.

Looking ahead, North American airlines "could face negative impacts on traffic and revenues as a result of the US government shutdown coming into effect in October, which back in 1996 caused tens of thousands of visa and passport applications to go unprocessed over a 27-day period," the report said.

On a month-to-month comparison, the Middle Eastern carriers have reported a 3.4% and 1% expansion in RPK and ASK in August compared to the global average of 1.2% and 0.5% respectively in July this year.

African carriers recorded 1.1% growth in RPL and 1.6% in ASK; Asia/Pacific (1% and 0.5%); Europe and North America (0.8% and 0.4% each) and Latin America (0.7% and 0.8%).

On Asia/Pacific, year-to-date growth is not quite half of that rate (4.6%) as regional emerging market indicators have been weak for several months, but "conditions appear to be stabilising in China and Asian with trade volumes rebounding in the third quarter after a sharp June decline," Iata said.

© Gulf Times 2013


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