Terrorism and Economic Uncertainties Fail to Dent Air Transport Growth in Asia

Jakarta Soekarno Hatta airport

IATA, the International Air Transport Association, released this week data about the evolution of air transport for the first half year of 2016. IATA highlights that air transport continues to growth but sees signs of weakening in demand due essentially to economic uncertainties coupled with the multiplication of terrorism acts, which start to depress travel -especially leisure travel.

Air transport has been particularly affected by terrorism with two serious attacks at airports this year, in Brussels and Istanbul. “The demand for travel continues to increase, but at a slower pace. The fragile and uncertain economic backdrop, political shocks and a wave of terrorist attacks are all contributing to a softer demand environment,” said Tony Tyler, IATA’s Director General and CEO.

Typically, the impact of acts of terrorism is just transitory, but  according to IATA, the repeated nature of recent events suggests that the effects may be longer lasting this time.

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. But even after correcting for
the extra day in February, IATA puts traffic growth at 5.4% year-on-year over the period – broadly in line with the average pace seen over the past decade. 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.

Asia remains largely unaffected by the various shocks experienced by air transport around the world and particularly in Europe, Africa and the Middle-East. International passenger traffic growth by Asia/Pacific carriers was up by 8.2% in June 2016, the second highest growth after Latin American airlines.

IATA analyses the growth of Asia Pacific carriers to a strong upward trend started in the final months of 2015 and into 2016. However, the association also observes a flattening of the upward trend with
June passenger volumes in Asia Pacific barely higher than in February. This could be the first sign of a possible reluctance of Asian travellers to go to Europe, being put off by terrorism. Passenger traffic on the Europe-Asia route fell by 2.6% year-on-year in May, and it has been the weakest performing major route so far in 2016 out of Asia. IATA charts show that Asia-Europe air transport grew on a year to year basis by less than 2% while passengers’ traffic between Asia and the Middle East was up by almost 8%, by over 6% within Asia and by 5% with North America.

Passengers load factor for the first half-year 2016 reached 78.5% in Asia Pacific, up by 0.5 percentage point over the same period of 2015. For international routes, the load factor stood at 77.8%, up by 0.3 point over 2015.