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February 2017 IATA Air Passenger Market Analysis

Leap year effects distort headline data, but a robust start to 2017

2016 leap year is affecting annual comparisons
Year-on-year growth in global revenue passenger kilometres (RPKs) fell to 4.8% in February from January’s five-year high (8.9%). However, the data are distorted by the fact that 2016 was a leap year. Adjusting for the one fewer day in February this year, we estimate that the ‘underlying’ RPK growth rate was closer to 8.6% – not far off January’s pace. 


The extra day in 2016 is also distorting data for January and February combined, albeit to a lesser extent. Industry-wide RPKs have grown by 7.0% in annual terms so far this year to date, but by 8.8% allowing for the leap year effect – well above the longrun average of around 5.5%.


A very strong, but explainable, start to 2017
The strong start to the year for passenger traffic has been underpinned by a combination of lower yields and airfares, and a stronger economic backdrop. The seasonally-adjusted (SA) downward trend in global yields has showed tentative signs of turning around in recent months. However, yields remain around 8% lower in annual terms and, allowing for inflation, the price of air travel has fallen by more than 10% in real terms over the past year. We estimate that the stimulus to demand from lower airfares can explain more than half the growth in RPKs in early 2017.


Meanwhile, business surveys continue to point to a broad-based cyclical pick-up in global economic conditions, which is helping to support air passenger demand too. Admittedly, the global services PMI dipped in February for the first time in six months. As noted recently, this indicator provides a useful leading indicator for the global passenger market. But the indicator remains elevated, and the relatively healthy economic backdrop on its own can explain around two-fifths of the growth in passenger traffic seen this year.


Highlights of the February 2017 Air Passenger Market Analysis

  • Annual passenger growth fell to 4.8% in February, but was distorted by the fact that 2016 was a leap year.
  • The passenger market has made a strong start to 2017, reflecting a combination of ongoing stimulus from lower airfares, stronger economic conditions, and a favorable annual comparison after disruption a year ago. 
  • Middle East airlines posted the fastest international growth, as India topped the domestic chart for the 23rd month in a row. 
  • Airlines have moderated capacity growth in recent months, with the load factor posting an all-time Feb high. Download the full document here. 

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