Passenger-traffic growth & moderate air cargo demand in 2018

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According to the International Civil Aviation Organization (ICAO), 4.3 billion passengers were carried by air transport on scheduled services in 2018.

The global number of departures rose to roughly 38 million, and world passenger traffic, expressed in terms of total scheduled Revenue Passenger Kilometers (RPKs), grew solidly to 8.2 trillion RPKs.

Over half of the world’s 1.4 billion tourists who traveled across international borders were transported by air last year, and that air transport now carries a third of world trade by value. Resulting in around 90% of cross border Business-to-Consumer (B2C) e-commerce being carried by air transport.

Passenger traffic 

The region carried 12 per cent share of world international RPKs and recorded a rebound from the 4.9 per cent in 2017 to 5.2 per cent in 2018.

Asia/Pacific, the second largest international market with 30 per cent RPK share, remained the fastest growing region.

Europe recorded the second highest growth making them the largest international market with 37 per cent share. This was followed by the growth in Latin America/Caribbean and Africa, which accounted for the smallest RPK share of 4 per cent and 3 per cent.

Carriers in the Middle East managed 14 per cent of world international RPKs and became the slowest growing region impacted by a number of factors such as the competitive environment – competing hubs and more point to point services, low oil prices and geopolitical tensions.

In terms of domestic scheduled passenger services, overall markets grew by 7.3 per cent in 2018, slightly up from the 7.1 per cent in 2017. This upward trend was helped by the strengthening in the domestic air travel demand in North America which accounted for almost half of the world domestic RPKs.

In addition, Asia/Pacific, the world’s largest domestic market with 42 per cent of traffic share, continued to grow double-digitally, contributed by the strong demand in India and China, owing to their increasing GDP per capita and growing domestic air connectivity.

 Air travel growth

Air traffic growth remained solid in 2018, underpinned by the global economic conditions throughout the year but according to the World Bank, Domestic Product (GDP) growth is estimated at 3.1 percent for 2018, before gradually slowing over the next two years.

All regions posted slower growth than last year, with the exception of an improvement in North America driven by the stronger US economy and continued international expansion of Canadian carriers.

The financial market stress, escalating trade protectionism and heightened geopolitical tensions continue to cloud the outlook.

Low-cost carrier activity

The low-cost carriers (LCCs) consistently grew at a faster pace than the world average growth, and its market share continued to increase, both in advanced and emerging economies.

In 2018, the LCCs carried an estimated 1.3 billion passengers. Market share of LCCs was the highest in Europe, followed by Latin America/Caribbean, North America, and Asia/Pacific.

Moderation in air cargo

After the sharp pick-up in air freight growth during the inventory restocking in 2017, air cargo traffic growth moderated in 2018, coinciding with the demand impacted by the trade tension and declining import and export orders.

World scheduled freight traffic, measured in Freight Tonne Kilometers (FTKs) grew modestly in 2018, compared to the 9.5 per cent recorded in 2017. The international segment of freight traffic which represents a large majority of total air freight grew by around 4.6 per cent while the scheduled international freight load factor remained at a similar level as last year.

Airline financial results

Average jet fuel prices increased by a third in 2018 but remained notably lower than the prices observed for the ten years prior to 2015. The low fuel cost coupled with solid increase in traffic helped the airlines to maintain relatively high record of profitable level in 2018 which is slightly lower from the previous year.

The airline industry ended 2018 with another record operating profit of around 57 billion dollars and an operating margin of 7 percent. The net profits for the Industry is expected to be around 34 billion dollars with nearly half of this being generated by air carriers of North America.

Deceleration in global economic growth forecasted by the World Bank could see moderation in traffic growth and profitability momentum in 2019.

The final official figures will be released in the 2019 Annual Report of the Council.