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January 2018 IATA Air Passenger Market Analysis
January 2018 Passenger Demand Growth Slows

Slowest annual RPK growth since March 2014…
Year-on-year growth in industry-wide revenue passenger kilometres (RPKs) slowed to 4.6% in January 2018, down from 6.4% in December.

This was the slowest annual RPK growth rate in almost four years. However, growth was distorted by the comparison with the strong upward trend in traffic seen during Q4 2016 and early-2017, as well as the later timing of Lunar New Year this year. We estimate that the latter effect accounts for around two-fifths of the slowdown in annual growth seen since December.

Both of these effects will ease in the coming months. Indeed, even if passenger traffic was unchanged in seasonally adjusted (SA) month-on-month terms in February, this would still be consistent with an acceleration in the annual growth rate next month.

…but traffic has carried momentum into 2018

In any case, the bigger picture is that global passenger traffic has carried solid momentum into 2018. Passenger volumes are currently trending upwards at a 5.5-6% annualized rate – slower than the full-year pace of growth seen last year but broadly in line with the ten-year average pace.

This is continuing to be supported by the robust global economic backdrop. The composite Purchasing Managers’ Index (PMI) – a measure of global business confidence that has proved to be a useful leading indicator of air passenger demand growth in the past – has remained at or around a three-year high in recent months. It is currently at a level that is usually consistent with year-on-year RPK growth in the region of 7.5-8%.

Solid trend for African airlines 
International RPKs flown by carriers based in Africa grew by 4.9% year-on-year in January. The upward trend in traffic remains solid, albeit set against a mixed economic backdrop for the region’s largest economies: business confidence in Nigeria has risen sharply over the past 15 months, helped by recent rises in oil prices, but political uncertainty is continuing to take a toll on economic activity in South Africa.

Highlights of the January 2018 Air Passenger Market Analysis

  • Year-on-year growth in global revenue passenger kilometres (RPKs) slowed to a 46-month low of 4.6% in January 2018, but this was distorted by temporary factors including the later timing of Lunar New Year this year.
  • We expect such effects to unwind next month and to see RPK growth pick up accordingly. The bigger picture is that global passenger traffic has carried solid momentum into 2018, helped by buoyant global economic conditions.
  • Passenger capacity grew faster than RPKs in annual terms in January for the first time in 15 months.
  • Domestic India RPKs posted their 41st consecutive month of double-digit year-on-year growth in January. Download the full document here. 

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