Middle East airlines post strongest passenger growth in July

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Middle East airlines posted the ‘strongest’ growth across various regions in July, with a 13.1% year-on-year increase, according to the latest ‘air passenger data’ revealed by the International Air Transport Association (IATA) and reported by Qatar’s top newspaper Gulf Times.

Passenger demand in the Middle East region dipped in June due to the holy month of Ramadan. Middle Eastern capacity rose 15.5%, causing load factor to drop 1.7% points to 78.6%, IATA said.

In fact, load factors on the largest routes to and from the Middle East, those between Asia and Europe, fell by 2.8 and 3.3 percentage points respectively in the first half of 2016, taking both to record period-lows.

Annual RPK

Annual growth in industry-wide revenue passenger kilometres (RPKs) accelerated to 5.9% year-on-year in July – the fastest rate in five months. Middle Eastern carriers regained their position at the top of the growth chart, followed by airlines in Asia Pacific.

Recent developments in industry-wide traffic growth reflect the net impact of a range of competing drivers. On the one hand, growth continues to face a number of headwinds, including lingering impacts from high-profile terrorist attacks and political instability in parts of Europe, as well as the ongoing fragile economic backdrop.

Global business confidence

Meanwhile, although global business confidence has edged up in recent months, the economic backdrop remains highly uncertain, with policy at a crossroads. Heightened uncertainty following the ‘Brexit’ vote in the UK exemplifies the downside risks in this regard.

On the other hand, air passenger demand is being supported by lower fares as well as wider competitive pressures in the market. Further stimulus to demand is likely to arrive during the rest of 2016.

The negative influences on demand growth have tended to dominate throughout much of 2016 so far, and industry-wide growth momentum has eased somewhat; correcting for the fact that February 2016 was a leap year, IATA estimates that industry-wide RPKs have grown by 5.5% year-on-year so far this year, compared to 6.3% during the same period of 2015.

“However, the bigger picture is that passenger traffic this year has still grown broadly in line with the average pace seen over the past decade or so. Moreover, the modest tick-up in seasonally-adjusted traffic in July shows that demand was resilient coming into the peak summer season. According to all indications, passenger traffic is set for another year of solid growth,” IATA said.

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