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29 March 2024

Mideast airlines continue to perform well

Published
By Shuchita Kapur
Demand for international air travel decelerated in March over the month before with the exception of Latin American and Middle Eastern carriers defying the trend and witnessing strong growth.

According to the International Air Transport Association (Iata), international passenger traffic rose 2.6 per cent in March, a significant slowdown compared to the 5.4 per cent increase in February. Capacity rose 5.5 per cent and load factor fell 2.3 percentage points to 78 per cent.

“After a number of very strong months we are seeing a slowing of demand growth. The strong performance of advanced economies nevertheless is likely to support the continued growth of traffic in the coming months,” said Tony Tyler, Iata’s Director General and CEO.

But, as most regions experienced a slowdown in growth, Middle East carriers performed much better and along with Latin America were the only regions to show better growth over February.

Middle East-based carriers had the strongest year-on-year traffic growth in March at 10 per cent as airlines continue to benefit from the strength of regional economies and solid growth in business-related premium travel.

“The Gulf nations are benefitting from acceleration in non-oil sectors of their economies and positive developments in sectors such as trade, transport and tourism. Capacity rose 10.7 per cent, however, and load factor dipped 0.5 percentage points to 79.5 per cent,” said the Iata statement.

Recently, Alpen Capital, in its report The GCC Aviation Industry Outlook predicted that growth in air passenger and air cargo traffic in the Middle East, between 2012 and 2032, is likely to outperform that of all other regions.

The report highlighted that air passenger traffic on outbound routes from the Middle East is expected to outpace that on traditional routes such as Europe and North America.

Within the Middle East, air passenger traffic in the UAE, Saudi Arabia, and Oman is expected to grow at a 6.6, 6.9, and 7.5 per cent CAGR, respectively, between 2012 and 2017.

Commenting on the March numbers, Iata figures show that Latin America was the only region to see an improvement in March compared to February, with regional carriers registering a rise of 4.7 per cent year-on-year, compared to 4.2 per cent in the prior month. The outlook for Latin American carriers remains positive, with continued robust performance from economies like Colombia, Peru and Chile.

Latin America was the only region with an increase in load factor- in March load factor was 78.8 per cent, up from 77 per cent in the year-ago period.

Asia-Pacific carriers experienced some of weakest traffic growth in March with international traffic up just 1.1 per cent compared to a year ago. This, Iata, attributes to the relative slowdown in demand after the positive impacts from the Lunar New Year in January/February. But the result is also probably owing to downward pressure from continued weakness in the Chinese economy, as well as a recent contraction in regional trade volumes. Capacity rose 5.3 per cent and load factor fell 3.1 percentage points to 76 per cent.

European carriers’ international traffic climbed 2.0 per cent in March compared to the year-ago period, down from a 5.7 per cent growth rate a month earlier. The slowdown may be linked to weaker economic performance in emerging markets given that Europe’s economic performance has been undergoing a continuous, steady improvement since mid-2013. Capacity rose 4.6 per cent and load factor slipped 2 percentage points to 79.6 per cent.

North American airlines saw demand rise 0.6 per cent in March compared to a year ago, a slowdown on the February growth rate of 2.0 per cent. Weakness in international air travel growth for North American carriers is likely in part due to the weather-related slowdown in the first quarter. With capacity up 4.7 per cent, load factor fell 3.3 percentage points to 80 per cent.

African airlines experienced the only contraction in demand among the regions, with demand down 2.6 per cent from a year ago. The weakness in international air travel could be in part from the adverse economic developments in some parts of the continent, namely the slowdown of South Africa. Airlines in Africa have seen virtually no growth – only 0.2 per cent – during the first quarter of 2014 compared to the same period in 2013, said Iata.

(Home page image courtesy Shutterstock)