UAE aviation to rebound in H2

GCC airlines, especially Emirates and Etihad, are set to ?soar higher after lifting of the ban on electronic devices to the US and as the growth of the wider Middle East carriers continues to witness a slowdown due to overcapacity.
The UAE's long-haul carriers are also expected to benefit from the Dubai Air Show which is projected to spur demand in the second half.
Saj Ahmad, an analyst with the London-based StrategicAero Research, told Khaleej Times in an e-mail interview that there's simply too much capacity floating around and that's driving down fares and also allowing customers to fly with non-GCC airlines.
"The travel ban hasn't helped, but the influx of new competition into the GCC has been a key factor impacting carriers across the board. With the US travel ban on electronic devices lifted, we'll see GCC airlines like Emirates and Etihad rebound on their US flights. These are key high-yield touch points on their network which will also drive up revenue. Couple that with flydubai and Emirates finally getting together, the signs are looking far better for the second-half of the year, especially as the Dubai Air Show too will spur demand," Ahmad added. According to the International Air Transport Association (Iata) statement released on Thursday, Middle Eastern carriers posted a 2.5 per cent traffic increase in June, which was a slowdown from the already subdued 3.7 per cent growth seen in May.
In the Middle East, Iata said capacity rose 3.1 per cent, and load factor slipped down 0.4 percentage points to 68.9 per cent. While most markets have seen demand slowing, it is most visible on the Mena market, which has been affected by a combination of factors including the (recently-lifted) ban on personal electronic devices, as well as a wider negative stimulation from the travel ban that has now been implemented for certain countries, Iata said.
However, passenger traffic between the Middle East and North America was already slowing in early 2017, in line with a moderation in the pace of growth of the largest carriers in the region. "A brighter economic picture and lower airfares are keeping demand for travel strong. But as costs rise, this stimulus of lower fares is likely to fade. And uncertainties such as Brexit need to be watched carefully. Nonetheless, we still expect 2017 to see above-trend growth," said Alexandre de Juniac, IATA's director general and CEO.
Globally, Iata traffic data showed that June demand (measured in total revenue passenger kilometers or RPKs) rose by 7.8 per cent compared to the year-ago period. This was in line with the 7.7 per cent growth recorded in May. All regions reported growth. June capacity (available seat kilometers, or ASKs) increased by 6.5 per cent, and load factor rose 1.0 percentage point to 81.9 per cent. For the first six months of 2017, the industry experienced a 12-year high in traffic growth of 7.9 per cent and a record first half load factor of 80.7 per cent. Regionally, Asia-Pacific airlines' June traffic jumped 9.1 per cent compared to the year-ago period. Capacity rose 7.9 per cent and load factor edged up 0.9 percentage points to ?79.3 per cent.
European carriers saw traffic rise 8.8 per cent in June compared to June 2016, which was up from a 7.5 per cent year-over-year increase recorded in May. Capacity climbed 6.5 per cent and load factor rose 1.8 per cent percentage points to 85.9 per cent, highest among the regions. North American airlines' demand rose 4.4 per cent compared to June a year ago. Capacity climbed 4.1 per cent, with load factor inching up 0.3 percentage points to 84.5 per cent.
Latin American airlines experienced a 9.7 per cent rise in demand compared to the same month last year supported by strong travel within the region, while travel to North America is flat to down slightly. Capacity increased by 9.1 per cent and load factor rose 0.4 percentage points to 82.1 per cent.
African airlines' traffic soared 9.9 per cent in June while capacity rose 7.1 per cent, and load factor jumped 1.7 percentage points to 64.3 per cent, although this still was the lowest among regions. - waheedabbas@khaleejtimes.com