Passenger traffic returned to more historic growth rates in 2013 helping to support the airline sector's more increased profitability for the year.
After the sharp adjustments in demand that followed the 2008 financial crisis, the steady steps toward recovery in passenger traffic turned into more confident strides in 2013.
Passenger traffic figures for more than 60 leading carriers from the Americas, Asia-Pacific and Europe grew nearly 6% in 2013. This is in line with traditional passenger traffic growth rates. However, traffic development across the leading carriers in these regions drew a mixed picture.
In North America, US operators – led by the US majors – continued to keep a tight grip on capacity. The biggest operator, Delta Air Lines, increased traffic only fractionally, while figures fell at second-largest carrier United Airlines. Traffic increased by less than 2% at the third-largest carrier, American Airlines. In all three cases this was in line with the carriers’ respective capacity moves, and the trip all fractionally improved passenger load factor.
While most other North American carriers' passenger traffic increased at a faster rate, it is notable that the three fastest-growing carriers – Allegiant Air, Hawaiian Airlines and Spirit Airlines – are among the smallest operators in the region. Overall passenger traffic among North American carriers grew less than 3% in 2013.
There was stronger traffic growth among European operators in 2013. Passenger traffic across nearly 20 carriers increased by 6% over the previous year. Again the region’s biggest carriers – Air France-KLM, British Airways and Lufthansa – increased traffic relatively slowly. BA grew the fastest of these three at 4%.
However, there was stronger growth at some of the region’s emerging operators. Aeroflot and Turkish Airlines' recent growth showed little sign of relenting in 2013, as traffic increased 19% and nearly 23% respectively. There was also double-digit growth at Air Europa, Icelandair, Norwegian, Transaero and Vueling. The growth at Spanish carriers Air Europa and Vueling was in stark contrast to the sharp capacity cuts at restructuring Iberia.
Asia-Pacific carriers recorded the largest growth of the three biggest markets. Passenger traffic at more than 20 airlines in the region last year was nearly 9% higher than in 2012.
Chinese carriers continue to grow rapidly – although Air China’s 40% passenger traffic increase also reflects the inclusion of Shenzhen Airlines, Air Macau and Dalian Airlines.
In India rapid growth continued at budget operators Indigo and Spicejet, in contrast to falling figures at Jet Airways.
Mirroring the picture in North America and Europe, there was either sluggish growth or declines at some of the Asia-Pacific's most established carriers, including Cathay Pacific, Korean Airlines, Qantas, Singapore Airlines and Japanese pair All Nippon Airways and Japan Airlines.
Airlines have largely managed to better fill the aircraft that have come into the market. Across the three biggest markets – even in Asia, where capacity expanded considerably – passenger traffic has outpaced the extra capacity. Load factors for the 60-plus carriers across the regions were 0.3 percentage points up on 2012 levels. This includes improvements of more than one point among European and North American carriers.
While it is yields rather than high load factors themselves that drive profitability, the fact demand has more than matched the extra capacity is contributing to a healthier profits outlook. IATA expects 2013 to have generated collective global airline profits of $13 billion – around $5 billion up on 2012. Meanwhile, an expected easing in fuel costs could help drive the biggest profit yet in absolute terms this year.
“We saw healthy demand growth in 2013 despite the very difficult economic environment,” said IATA director general Tony Tyler, after the association released its traffic figures, showing a growth rate for the industry of 5.2%. “There was a clear improvement trend over the course of the year, which bodes well for 2014.”
Global figures from ACI World show passenger numbers across airports increased by 4% in 2013. The council, like IATA, points to a strong end of the year. ACI figures show passenger growth of 6% in December – the strongest month of the year.
"As we end the year with a strong December, it is important to highlight the resilience of global passenger traffic in 2013,” says ACI World’s economics director Rafael Echevarne. “While there were fears that growth would become more subdued, preliminary figures still point to year-over-year growth in passenger traffic that is in the vicinity of 3.5-4%, which is formidable considering the economic environment.
“Nonetheless, as international traffic remained relatively strong domestic travel was curtailed, mainly because of economic challenges in [the] European and North American markets."
But while passenger traffic figures have strengthened, air cargo demand has remained sluggish. IATA suggests air freight markets saw a “slow and steady” improvement in 2013 as they grew by 1.4%. However, it adds that air cargo markets saw a “relatively more supportive demand backdrop” in 2013 as world trade growth picked up, and business confidence appears to be at a high not seen since the first quarter of 2011.
Though the picture is improving, world trade has not accelerated in line with previous levels. “The principal problem is that world trade has been weak and we’re not seeing the export and import growth that we would normally have seen as economic activity picks up,” says IATA chief economist Brian Pearce. World trade had been growing at 6-8% before the financial crisis, but is currently increasing at around 3%.
“The biggest worry for the airlines in [the Asia-Pacific] right now is probably cargo,” adds Tyler. “Air cargo continues to be weak, and for the big airlines it is an important component of their revenue.”
Tyler says cargo growth has “pretty much flat-lined” for the past couple of years, which has been “a big problem” for airlines in the Asia-Pacific. Carriers in the region suffered a 1% decline compared with 2012, despite increasing capacity almost 1%.
One market that appears to have been immune to the cargo slump is the Middle East. The region’s airlines enjoyed near 13% growth last year, as they benefited from improving economic conditions in Europe, solid growth in domestic economies and successfully captured a significant share of increasing African business.
European table amended on 21 February to correct ASK and load factor figures for Transaero, and overall traffic growth for selected carriers to 5.7%