Demand for Asia Pac carriers crashes in July

Demand contracted by 1.3% MoM.

On annual basis, International Air Transport Association IATA said that Asia Pac carriers saw demand growth of just 0.9%, a major slowdown from the 5.8% recorded in the June year-on-year comparison.

According to IATA, European airlines appear to be benefiting more than Asia-Pacific airlines from the recently stronger trade flows from West to East, while the Middle Eastern airlines continue to offer strong competition on long-haul markets.

IATA said that the downward growth trend began in the second quarter of 2012 and has now continued into the third.

The weak demand for Asia Pac carriers follows the global downtrend. IATA announced global traffic results for July showing slower growth in both air travel and freight, but with considerable variation by region and market.

Here's more from IATA

July passenger demand in aggregate was 3.4% higher than the same month last year, compared to a 6.3% increase in June and average growth of 6.5% over the first half of the year. This slowdown in travel growth is being driven largely by the recent fall in business confidence in many economies.
 

July freight demand was 3.2% lower than it was in the same month last year. This is down on the 0.1% year-on-year growth rate of June. A large part of that decline was due to a comparison with a relatively strong July last year, but overall the trend in air freight is weak, in line with subdued world trade growth.

Airlines have responded to this slower growth environment by reducing the capacity added to markets, a move which has stabilized load factors at relatively high levels and provided some support for profitability in the face of high fuel prices. In July passenger capacity rose 3.6%, in line with the expansion of traffic, keeping the load factor at a relatively high 83.1%.

“The uncertain economic outlook is having a negative impact on demand for air transport,” said Tony Tyler, IATA’s Director General and CEO. “The cargo business is 3.2% smaller than it was a year ago. And passenger markets—with the exception of Africa, China-domestic and the Middle East—saw demand fall from June to July. Overall passenger demand is still up 3.4% on the previous July. But the growth trend is clearly slowing. This, along with rising fuel prices is likely to make it a tough second half of the year.”