Cheap oil fuels travel sector growth

The International Air Transport Association (Iata) said passenger traffic continued to grow above average as lower fares lured travelers despite slowing economic growth and the overall industry was now on a path to “financial sustainability.”

Iata, citing its latest data as of November last year, said total revenue passenger kilometers, or RPK, was up 5.9 percent while average fares fell 5 percent around the world. The 10-year average growth rate stood at 5.6 percent, it said.

For Asia-Pacific alone, passenger traffic climbed 7.9 percent in November. Iata said capacity was also up 5.7 percent and load factor rose to 76.2 percent.

It noted that the weakness in emerging Asia trade activity as well as slower than expected growth in China appeared not to be impacting international RPKs for Asia-Pacific carriers, Iata said.

Other regions also gained, according to data from Iata. This was led by Middle East carriers, which saw demand increase 9.8 percent in November while capacity was up 11.8 percent.

European carriers saw demand increase by 2.2 percent while in North America, traffic was up 2.1 percent. Carriers based in Latin America and Africa also saw traffic rise 10.7 percent and 12.2 percent, Iata said.

“The airline industry is delivering solid financial and operational performance. The industry’s return on capital for 2015 and 2016 is expected to exceed its cost of capital—a very rare occurrence. This means we are on the path toward financial sustainability,” Tony Tyler, Iata CEO and director general, said in a statement.

“Consumers are benefiting from lower fares and airlines are able to invest in new aircraft that are more comfortable, quieter and more environmentally friendly,” he said.

Tyler noted that flyers were being lured by lower fares. “Consumers continue to benefit from lower fares, which are spurring demand,” he said.

“The economy benefits from the stimulus to consumer spending and airlines are starting to achieve minimum acceptable profit levels. It’s good news all around, but as we open 2016, economic risks are mounting,” he added.

Iata is a global trade organization of commercial carriers. Philippine Airlines is among the organization’s  260 member-airlines, which comprise about 83 percent of total global air traffic.

In a separate statement, the Iata said the decline in global freight volume has bottomed out. It noted that November 2015 volume was down 1.2 percent year-on-year. However, the figure for the month was up compared to October that same year.

“The freight performance in November was a mixed bag. Although the headline growth rate fell again, and the global economic outlook remains fragile, it appears that parts of Asia-Pacific are growing again and globally, export orders are looking better,” Tyler said.