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Demand cycle is weakening: Flight Ascend Consultancy

Passenger traffic and demand growth were both lower in 2016 compared with 2015, leading Flight Ascend Consultancy to conclude that aviation is past its cyclical peak.

During a commercial webinar today, Flight Ascend Consultancy's global head Rob Morris said the "profit cycle turned last year in line with the demand cycle".

He adds: "We see clouds building on the horizon, which leads to our headline comment – demand side weakening, trends suggest we may be past cyclical peak."

Morris points out that last year started very well but started to slip as it closed, particularly in terms of yields and deferrals and cancellations.

Airlines' collective annual net profit is likely to come in at a record high for 2016. But Flight Ascend Consultancy is warning that this is "as good as it gets". Lower fuel costs helped yields stay positive while demand slowed.

Expectations for next year are still optimistic, however, with airline profits set to be lower than last year but still representing the third best year on record. "There would have to be significant disruption for this landmark to not be achieved," says Morris.

He adds that while it is too early to assess the quantitative impact of US president Donald Trump's travel ban, any restriction to personal movement or trade restrictions will likely have a negative impact on passenger and cargo traffic.

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