Aviation row fails to deter Mideast airlines’ growth

Regional carriers sustain strong double-digit expansion in Jan-Apr

Dubai - The ongoing aviation row with US major airlines fails to deter the growth of Middle Eastern airlines as they stay ahead of their global peers by sustaining strong double-digit passenger traffic growth in the first four months of 2015.

Latest data issued by the International Air Transport Association, or Iata, indicates that the demand for passenger traffic across the Middle East stood firm at 11.6 per cent during the January-April 2015 period compared to the global average of 6.3 per cent.

Regional carriers also stayed on top in terms of passenger capacity by posting a 14.2 per cent year-on-year growth during the first four months of 2015 as against the global average of 5.8 per cent in the same period.

In April, the Middle East’s carriers experienced a slowdown in demand as it dropped to 8.2 per cent from 14 per cent in the corresponding month last year, but this was exceeded by a 13.3 per cent jump in capacity with the result that load factor dropped 3.6 percentage points to 77.2 per cent.

The international transport body further said economies across the region are reasonably well-positioned to withstand the plunge in oil revenues and regionally-based carriers continue to gain market share. Markit’s measure of business activity in the non-oil sector continue to show improvement and point to strong growth.

African airlines’ year-to-year traffic fell 3.2 per cent in April, while capacity dropped five per cent, resulting in a 1.3 percentage point rise in load factor to 67.5 per cent. Negative economic developments in parts of the continent, including Nigeria, which relies heavily on oil revenues, are likely contributing to the depressed results.

“Demand for connectivity remains strong. That’s positive news. But the performance of the industry is multi-tiered. Middle East and Asia-Pacific based carriers led with growth well above the global average of 5.9 per cent, while carriers in Europe and the Americas were below it. And African airlines reported a contraction compared to the previous year” Tony Tyler, director-general and chief executive of the Iata, said in a statement.

 

UAE airlines growth driver

Saj Ahmad, chief analyst at London-based StrategicAero Research, said the stand-out results show that the GCC region has far and away been the most consistent performer when it comes to traffic growth on a monthly basis.

“While regions like Asia and Latin America too enjoy growth, the GCC, despite the regional turmoil in [parts of the Middle East], growth and flight demand led by the continued proliferation of new routes keeps fares attractive for passengers and the core strengths of the UAE in particular, feeds this regional expansion,” Ahmad told Khaleej Times.

Elaborating, he said the UAE is home to the four big airlines — Emirates, Etihad Airways, Air Arabia and flydubai — and driving traffic growth as airlines from here expand faster than ever before.

“These airlines touch almost 500 destinations offering a variety in pricing and frequencies to passengers that helps boost their organic growth across the globe,” he said.

About the future trend, he said there may be some tempering of demand as the holy month of Ramadan approaches this month. “The region is expected to see robust passenger and freighter traffic from mid-July through to the end of the third quarter in September. As the Dubai Airshow approaches in the fall, I’d expect to see a sharp uptick in traffic activity too,” Ahmad said.

 

Asia-Pacific on top in April

The Iata said global passenger traffic results showed robust demand growth in April this year as total revenue passenger kilometres rose 5.9 per cent while capacity increased by 6.1 per cent. However, load factor slipped 0.1 percentage point to 79.4 per cent.

Asia-Pacific airlines recorded the highest growth in April as passenger traffic jumped nine per cent compared to the year-ago period. Capacity rose six per cent and load factor surged 2.2 percentage points to 78.3 per cent. European carriers experienced a 3.7 per cent year-on-year demand increase in April as capacity rose 4.7 per cent and load factor declined 0.8 percentage point to 80.7 per cent.

North American airlines had just a 0.7 per cent rise in traffic compared to April a year ago. US economic growth turned negative in the first quarter of 2015 while the stronger dollar is likely hampering inbound leisure travel. Capacity rose 4.1 per cent and load factor fell 2.6 percentage points to 78.1 per cent.

The Iata said global economic outlook remains broadly positive with the fall in oil prices compared to mid-2014 and it is expected to sustain growth and demand for passenger travel in 2015.

“Most recently, although improvements in business confidence have stagnated due to weakness in emerging markets, some advanced economies are showing improvements, which should help support growth in air travel,” according to the Iata.

— muzaffarrizvi@khaleejtimes.com