Published on February 9th, 2016 | by Jim Lee0
Compelling evidence of strong passenger traffic growth in 2015
Figures by two aviation industry associations, ACI Europe and International Air Transport Association (IATA), gives compelling evidence of strong passenger traffic growth in 2015. In its traffic report for 2015, released on 5th February, ACI Europe, the European airport trade association, revealed that passenger traffic across the European airport network in 2015, grew by an average of 5.2%. This is the only air transport report which includes all types of civil aviation passenger flights to and from Europe: full service, low cost, charter and others. The daa (Dublin and Cork airports), Kerry Airport Plc., Knock Connaught Airport Development Company Ltd. and the Shannon Airport Authority are all members of the association.
At EU airports, the average increase in passenger traffic was 5.6%, with airports in Ireland, Portugal, Greece, Romania, Hungary, Slovakia, Slovenia and Lithuania achieving double-digit growth. Meanwhile, non-EU airports reported diminished growth of 3.9%. This was mainly due to a significant decline in demand for air travel across Russian and Ukrainian airports, as well as almost flat growth in Norway – despite a stellar increase in passenger traffic in Iceland and sustained growth at most Turkish airports.
Freight traffic at Europe’s airports only grew by 0.7%, as international trade remained subdued. Aircraft movements saw an increase of 2.2%.
Olivier Jankovec, Director General ACI Europe said “2015 has been a very good year in terms of passenger traffic, with European airports welcoming an estimated 1.95 billion passengers. 20% of them achieved a double-digit increase and many broke new traffic records – mostly fuelled by the continued growth of low cost airlines and selected non-EU airlines. EU airports generally performed extremely well, despite Germany and France being impacted by airline & ATC strikes and the Paris terror attacks. Remarkably, Istanbul-Atatürk airport became the 3rd busiest European airport with 61.8 million passengers, after London- Heathrow (74.9 million) and Paris-Charles de Gaulle (65.7 million). It should be noted however that small regional airports across the continent underperformed the European average, with their passenger volume only increasing by +3.8%. This is indicative of traffic growth becoming more concentrated and less inclusive.”
Comparing 2008 and 2015
Commenting on the air traffic recovery since the global financial crisis, Mr. Jankovec added: “While the EU economy did not even grow by 3% between 2008 and 2015, passenger traffic at EU airports increased by 13.6% over the same period. Such a wide gap is pointing to a lasting discontinuity in the usual relationship between GDP growth and passenger traffic performance. This is reflective of new market dynamics, changing consumer behaviours and the increased importance of air transport for the European economy.”
Over the full year, airports welcoming more than 25 million passengers per year (Group 1), airports welcoming between 10 and 25 million passengers (Group 2), airports welcoming between 5 and 10 million passengers (Group 3) and airports welcoming less than 5 million passengers per year (Group 4) reported an average improvement of 3.7%, 6.3%, 7.1% and 5.5% respectively.
Dublin, which is a Group 2 airport, fared particularly well, coming behind Istanbul’s Sabiha Gökçen airport at 19.7% and Athens at 19.1% with a 15.3% increase, followed by London STN (up 12.8%) and Izmir (up 12.1%).
Looking at the outlook for the coming months, Mr. Jankovec concluded: “The positive momentum created by improving economic conditions in the Eurozone, low oil prices and loose monetary policy is likely to persist for most of 2016. This should help keep passenger traffic growing – except for Russian airports. However, downside risks abound, and they are mainly of a geopolitical nature – both home-grown and external. These range from the unprecedented migration crisis and its repercussions on Schengen to the UK Brexit, heightened terrorist threats, instability in the Middle East & North Africa and deteriorating prospects in emerging markets.”
Global passenger demand rose 6.5% according to IATA
Separately, but on the same day, the International Air Transport Association (IATA) announced global passenger traffic results for 2015, showing demand (revenue passenger kilometres or RPKs) rose 6.5% for the full year, compared to 2014. This was the strongest result since the post- Global Financial Crisis rebound in 2010 and well above the 10-year average annual growth rate of 5.5%. While economic fundamentals were weaker in 2015 compared to 2014, passenger demand was boosted by lower airfares. After adjusting for distortions caused by the rise of the US dollar, global airfares last year were approximately 5% lower than in 2014.
“Last year’s very strong performance, against a weaker economic backdrop, confirms the strong demand for aviation connectivity. But even as the appetite for air travel increased, consumers benefitted from lower fares compared to 2014,” said Tony Tyler, IATA’s Director General and CEO. Annual capacity rose 5.6% last year; with the result that load factor climbed 0.6 percentage points to a record annual high of 80.3%. All regions experienced positive traffic growth in 2015. Carriers in the Asia-Pacific region accounted for one-third of the total annual increase in traffic.
International Passenger Markets
International passenger traffic rose 6.5% in 2015 compared to 2014. Capacity rose 5.9% and load factor rose 0.5 percentage points to 79.7%. All regions recorded year-over-year increases in demand.
Asia Pacific carriers recorded a demand increase of 8.2% compared to 2014, which was the largest increase among the three largest regions. Demand was stimulated by a 7.3% increase in the number of direct airport connections in the region, resulting in time- savings for travellers. Capacity rose 6.4%, pushing up load factor 1.3 percentage points to 78.2%.
European carriers’ international traffic climbed 5.0% in 2015. Capacity rose 3.8% and load factor increased 1% to 82.6%, highest among the regions. The healthy result in part was attributable to a pick-up in consumer spending in the Eurozone as well as a moderate increase in flight frequencies. Traffic growth slowed toward the end of the year owing to strikes at Lufthansa and the shutdown of Russia’s Transaero.
North American airlines saw demand rise 3.2% in 2015, broadly unchanged from the growth achieved in 2014. Capacity rose 3.1%, edging up load factor 0.1 percentage points to 81.8%.
Middle East carriers had the strongest annual traffic growth at 10.5%. As a result, the share of international traffic carried by Middle East airlines reached 14.2%, surpassing their North American counterparts (13.4%). Capacity growth of 13.2% exceeded the demand gains, pushing down load factor 1.7 percentage points to 76.4%.
Latin American airlines’ traffic rose 9.3% in 2015. Capacity rose 9.2% and load factor inched up 0.1 percentage points to 80.1%. While key regional economies, particularly Brazil, have been struggling, overall traffic has been robust.
African airlines had the slowest annual demand growth, up 3.0%, although this was a significant improvement over the 0.9% annual growth achieved in 2014. With capacity up just half as much as traffic, load factor climbed 1 percentage point to 68.5%. International traffic rose strongly in the second half of 2015, in conjunction with a jump in trade activity to and from the region.
Domestic Passenger Markets
Domestic air travel rose 6.3% in 2015. All markets showed growth, led by India and China but there was wide variance. Capacity rose 5.2% and load factor was 81.5%, up 0.9 percentage points over 2014.
Brazil’s domestic air travel rose just 0.8% in 2015, reflecting the country’s deteriorating economic situation. Traffic trended downward throughout the year.
US domestic traffic climbed 4.9% last year, helped by solid economic growth. This was the fastest rate of increase since 2004 and the first time since 2003 that domestic traffic growth surpassed international growth. The load factor reached a domestic record high of 85.4%.
The Bottom Line: “Aviation delivered strong results for the global economy in 2015, enabling connectivity and helping to drive economic development. The value of aviation is well understood by friends and families whom aviation brings together, by business travellers meeting clients in distant cities, and particularly by those for whom aviation is a lifeline in times of crisis. “It is very disappointing to see that some governments still wrongly believe that the value of taxes and charges that can be extracted from air transport outweighs the benefits—economic and social—of connectivity. The most recent example is the dramatic increase in the Italian Council Tax levied on air passengers. This 33-38% hike will damage Italian economic competitiveness, reduce passenger numbers by over 755,000 and GDP by €146 million per year. An estimated 2,300 jobs a year will be lost. At a time when the global economy is showing signs of weakening, governments should be looking for ways to stimulate spending, not discourage it.”