Industry-wide revenue passenger kilometres (RPKs)* grew by 6.0% year-on-year in the first half of 2016 – slightly ahead of the 5.9% increase seen in the same period in 2015.

 

An uptick of 5.2% was noted in year-on-year growth of RPKs in June, from an upwardly-revised 4.8% in May, however IATA says it has noticed over the past few months, that there are ongoing signs that passenger growth has shifted down a gear.

 

“The upward trend in seasonally-adjusted volumes has moderated since January; the market has grown at annualized rate of around 3.5% since the start of the year – the weakest showing since 2011,” says IATA.

“The loss of momentum can be attributed partly to the ongoing and cumulative impacts of recent high-profile terrorist attacks, which have weighed on international European traffic in particular.

 

IMPACT ‘NOT JUST TRANSITORY’

“Typically, the impact of such shock events is just transitory, but the repeated nature of recent events suggests that the effects may be longer-lasting this time.”

 

More generally, IATA says the ‘fragile and increasingly uncertain global economic backdrop’ continues to present a headwind to passenger demand as well. “Heightened uncertainty following the ‘Brexit’ vote in the UK only increases the downside risks in this regard.”

 

 

Passenger demand continues to be supported by lower airfares and further stimulus is likely to come through during the rest of 2016 from lagged impacts of prior falls in oil prices.

 

Annual growth in international RPKs increased to 5.0% in June, from 4.4% in May, however, the (seasonally-adjusted) trends in the two largest international regions, Europe and Asia Pacific (whose combined international traffic accounts for more than 40% of global RPKs), have eased in recent months.

 

UNCERTAINTY OVER BREXIT

“Typically, demand tends to recover reasonably quickly after such shock events, but the repeated nature of recent actions suggests that impacts may persist this time – to the detriment of certain markets,” adds IATA.

 

“Uncertainty following the ‘Brexit’ vote in the UK is also expected to hit European airlines and markets the hardest in the coming months.”

*Revenue passenger kilometres (RPKs) are calculated by multiplying the number of revenue-paying passengers aboard the vehicle by the distance travelled.