IATA: Cheap airfares & better global economy boost demand

World demand for air travel rose sharply in April, thanks to global economic activity and lower airfares, IATA data for the month show.

Releasing April world traffic data ahead of the IATA AGM, which opens June 4 in Cancun, IATA said passenger international and domestic traffic data measured in RPKs rose 10.7% compared to April 2016, which was the fastest pace in six years. April ASKs capacity increased 7.1%, while load factor climbed 2.7 percentage points to 82%—a record for the month of April.

“The strong performance is supported by a pick-up in global economic activity and lower airfares. After adjusting for inflation, the price of air travel in the first quarter was around 10% lower than in the year-ago period,” IATA said.

IATA estimates that falling airfares accounted for around half the demand growth in April.

But there were some anomalies. Middle Eastern carriers, while posting a 10.8% traffic rise, saw their April growth rate to be slower than the five-year average growth pace. Moreover, in seasonally adjusted terms, the region’s international traffic has tracked sideways since January. IATA said the US cabin ban on laptops and tablets from 10 Middle Eastern and African airports to the US appears to have weighed down Middle East-North America passenger traffic.

“There are indications that passengers are avoiding routes where the large personal electronic device ban is in place. As the US Department of Homeland Security considers expanding the ban, the need to find alternative measures to keep flying secure is critical. If the ban were extended to Europe-to-US flights, for example, we estimate a $1.4 billion hit on productivity. And an IATA-commissioned survey of business travelers indicated that 15% would seek to reduce their travel in the face of a ban,” IATA director general and CEO Alexandre de Juniac said.

Overall, however, April international passenger demand rose 12.5% compared to April 2016, with all regions recording double-digit year-over-year traffic increases for the first time in 12 years. Total capacity climbed 7.7%, and load factor climbed 3.5 percentage points to 81.5%. By region, the April year-over-year increases were 14.4% for European carriers; 10.9% for Asia-Pacific airlines; 10.3% for North American airlines; 16.1% for Latin American carriers; and 17.2% for African airlines.

“The April numbers show some very strong results,” IATA chief economist Brian Pearce said. “They were boosted by better economic conditions and world trade conditions, as well as the continuing boost in cheap air travel.”