Asia shows signs of weakness– IATA

The deceleration of the Chinese economy could be responsible for Asia losing the spotlight in July’s air traffic numbers, claims the CEO and director general of IATA.

The body, which represents around 240 airlines and 84% of global air traffic, made the announcement after Europe managed to pull itself out of recession, providing the biggest surprise to global traffic numbers.

Globally, revenue per passenger kilometres (RPK) was up 5% year-on-year (y-o-y) while capacity increased 5.5% y-o-y, all of which has delivered a positive month, the group’s boss said.

“Passenger demand continues to be strong,” said Tony Tyler, IATA’s director general & CEO. “But the story of emerging markets driving growth as developed economies stagnate could be shifting. We are still expecting growth of 5% this year. How that growth is achieved, however, appears to be at a turning point.”

We are still expecting growth of 5% this year. How that growth is achieved, however, appears to be at a turning point

Regionally, the carriers of Asia Pacific reported a 6.3% y-o-y rise in traffic. However, the support for growth at this rate is weakening, says IATA. China’s economy reached a plateau, affecting its second quarter figures as it continued to decelerate. This had consequences for trade partners throughout the continent and is expected to affect flight traffic. There are also serious worries for India, amidst the current crisis it is undergoing. IATA has scaled back performance for the year to 4.1%– meaning a significantly more sobering second half of the year.

Europe on the other hand, has seen a real boost, recording a 3.7% y-o-y increase and an emergence from recession significantly raising confidence around performance for the rest of the year.

July passenger traffic up 5%. Emerging markets show biggest growth: MidEast up 7.8%, Africa up 7.5% http://t.co/5jKyiA4lHE

— IATA (@IATA) September 3, 2013

“The emergence of the eurozone from an 18-month recession provided the biggest boost to traffic over recent months. In contrast, the deceleration of the Chinese economy has been a dampener on air travel, with weakness showing up throughout emerging Asian markets. The price of oil, a huge cost item for airlines, is tracking political tensions in the Middle East. Along with the global cost impact of this, at the regional level there is the potential for disruption for one of aviation’s strongest and most consistent growth markets,” explained Tyler.

“Aviation is about growing connectivity and all the economic and social benefits it enables. Sustainability is a core part of this vision. We are doing all we can to support fully the success of governments in agreeing an aviation solution for sustainability that is global and which will underpin the future development of our important industry.”