The threat of international terrorism, rising oil prices and controversial travel bans appear to have done little to dampen our appetite for air travel. New figures published by the International Air Transport Association (IATA) showed a strong demand for air travel in February 2017, continuing the trend from the previous month.
The key metric in all this is known as total ‘revenue passenger kilometres’ or RPK for short. Put simply, the RPK measures the total distance travelled by fare-paying passengers – measured in kilometres (of course). In February, the global RPK rose a healthy 4.8% compared to the same month in 2016.
That wasn’t quite as good as January’s figures when the RPK reached a five-year high of 8.9% growth but its still a really healthy start to the year. And when you take account of the fact that February 2016 was a leap year, the adjusted figures show a rise of 8.6% – not bad at all.
Airlines the world over have been battling to make money as increased capacity drives down fares. This doesn’t look like its going to change anytime soon as available capacity continued to increase – Up 2.7% in February. The silver lining on this was that the load factor (or how full the aircraft is) remained high at 79.5% – a modest increase of 1.6% and the highest ever recorded in the month of February.
Middle East airlines were the star performers for international travel with the strongest global RPK growth of 9.5%. They also saw their load factor rise to 74.3% at a time when the ME3 – Emirates, Etihad and Qatar Airways – are feeling the pinch from increased competition, possible travel bans to the U.S. and restrictions on carry-on luggage.
IATA’s Director General, Alexandre de Juniac, said of the results: “The strong demand momentum from January has continued, supported by lower fares and a healthier economic backdrop.”
Commenting on the U.S. travel restrictions, de Juniac commented: “Although we remain concerned over the impact of any travel restrictions or closing of borders, we have not seen the attempted US ban on travel from six countries translate into an identifiable traffic trend.”
However, it wasn’t all good news for airlines. The IATA figures show that yields are down by as much as 8% with the price of air travel falling by 10% in the past year. Responding to falling yields, Atlanta-based Delta Air Lines said in January that it planned to increase airfares by an average of 2% in the first three months of the year.
IATA suggested that low air fares accounted for nearly half the demand for air travel in the first three months of the year. However, it noted that there are ‘tentative’ signs of improvement in airline yields.
The bottom line would suggest that demand for air travel continues to rise on the back of cheap tickets and an improving global economic situation. For passengers, it’s been a great time to fly but the days of falling fares may well be numbered.
