2017 witnessed 7.1% spur in global civil air traffic and air cargo: ICAO

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January 19, 2018:  According to International Civil Aviation Organization (ICAO), the overall aviation industry enjoyed a fruitful year in 2017, setting new annual record in passenger and air cargo traffic.

The aviation industry carried 4.1 billion passengers during 2017, indicating a 7.1 percent increase over 2016. 

The number of departures rose to approximately 37 million globally, and world passenger traffic, expressed in terms of total scheduled revenue passenger%u2014kilometres (RPKs), posted an increase of 7.6 percent, with approximately 7.7 trillion RPKs performed. The growth figures indicate a slight improvement from the 2016 figures where it achieved 7.4 percent growth.

'The sustainable growth in the global civil air traffic is demonstrated by constant improvements in the aviation safety, security, efficiency and environmental footprint. This sustainability is the result of concerted efforts and cooperation at the national, regional and global levels, particularly in terms of ICAO compliancy, which is key to accessing the global network,' said ICAO council president,  Dr. Olumuyiwa Benard Aliu.

'Air traffic growth is making key contributions towards the achievement of United Nations agenda 2030%u2014Sustainable Development Goals, offering an opportunity to lift a generation out of poverty, figuratively and literally,' said ICAO secretary general, Dr. Fang Liu. 

'As a UN agency, ICAO is deeply committed to ensuring that all countries have an opportunity to benefit from the doubling in flight and passenger volumes forecast for the next 15 years,' said Liu. 

This is illustrated by the fact that over half of the world's 1.2 billion tourists who travelled across international borders last year were transported by air, and that air transport now carries some 35 percent of world trade by value. 

Indeed, over 90 percent of cross border business-to-consumer (B2C) e-commerce was carried by air transport. 

Air travel demand growth has gained solid momentum, supported by the ongoing improvement in global economic conditions across the year. World real gross domestic product (GDP) growth was projected at 2.7 percent in 2017, an increase by 2.4 percent witnessed in 2016, and is expected to further strengthen to 2.9 percent in 2018. 

The upward trend was driven by the surge in investments in advanced economies and recovery in emerging markets and developing economies owing to the spike in export demand. 

The lower air fares owing to the low fuel price also continued to stimulate traffic growth, albeit at a more moderate level compared to 2016.

PASSENGER TRAFFIC

International scheduled passenger traffic expressed in terms of RPKs grew by 8.0 percent in 2017, up from the 7.8 percent recorded in 2016. 

All regions recorded stronger growth than in the previous year, with an exception of a slowdown in the Middle East due to a combination of factors, such as the competitive environment%u2014competing hubs and more point-to-point services, low oil prices and the impact of a strong US dollar. 

The region carried 14 percent RPK share and experienced a significant decline in growth from the 11.8 percent observed in 2016 to 6.9 percent in 2017. 

Europe remained as the largest international market with 37 percent share of world international RPKs, and grew strongly by 8.1 percent, supported by the improved economic conditions in the region. 

Asia/Pacific had the second largest share with 29 percent, and grew by 9.6 percent, the second strongest growth among all regions. 

North America accounted for a 13 percent share, and demonstrated an improvement compared to last year, however, remained as the slowest growing region with a growth of 4.9 percent.

Carriers in Latin America and the Caribbean managed four percent of world international RPKs and saw the biggest improvement among all regions and recorded the strongest growth at 10.0 percent.

Africa with the smallest share of three percent, grew slightly faster than last year at 7.6 percent. 

INTERNATIONAL SCHEDULED PASSENGER TRAFFIC (RPK) GROWTH IN 2017

In terms of domestic scheduled air services, overall markets grew by 7 percent in 2017, an improvement from the 6.7 percent growth recorded in 2016. 

Owing to the strong demand in India and China, especially the former with over 20 percent growth, the Asia/Pacific region grew strongly by 10.6 percent in 2017 while North America posted a slower pace compared to last year, at 3.8 percent in 2017. Both regions were the world's largest domestic markets with each accounting for around 41 percent share of world domestic scheduled traffic.

LOW-COST CARRIER ACTIVITY

The low-cost carriers (LCCs) consistently grew at a faster pace compared to the world average growth, and its market share continued to increase, specifically in emerging economies. In 2017, the LCCs carried an estimated 1.2 billion passengers, and accounted for approximately 30 percent of the world total scheduled passengers. LCCs in Europe represented 33 percent of total passengers carried by LCCs, followed by Asia Pacific and North America with 31 percent and 26 percent, respectively.

LOAD FACTORS IMPROVED TO A RECORD HIGH

Industry capacity expansion outstripped the increase in travel demand. Total capacity offered by the world's airlines in 2017, expressed in available seat-kilometres (ASKs), increased globally by around 6.4 percent. As a result, overall passenger load factor improved by 0.9 percentage points and reached a record high of 81.2 percent. The Middle East was the only region posting a decline in load factors, as being under pressure with the slowing trend in traffic growth. Load factor varies by region, ranging from 70.8 percent for Africa to 83.4 percent for North America.

SURGE IN AIR CARGO

Underpinned by the improving global economic conditions and world trade with increasing import and export orders, air cargo demonstrated a strong rebound in 2017. 

World scheduled freight traffic, measured in freight tonne-kilometres (FTK) grew robustly by 9.5 percent in 2017, a significant improvement from the 3.8 percent growth registered in 2016. 

The international segment of freight traffic which represents nearly 87 percent of the total air freight grew by around 10.3 percent, up from the 3.7 percent growth in 2016. The scheduled international freight load factor improved as well from around 53 percent in 2016 to 55 percent in 2017.

AIRLINE FINANCIAL RESULTS

Average jet fuel prices increased by approximately 25 percent in 2017 compared to 2016, but remained significantly lower than the prices observed for the ten years prior to 2016. 

This coupled with improvement in traffic helped the airlines to maintain their operating profit nearly at the same levels seen in 2016. The airline industry is expected to end 2017 with another record operating profit of around $60 billion and an operating margin of 8 percent. The net profits for the Industry are expected to be around $36 billion with nearly 45 percent of this being generated by air carriers of North America.

Improving economic conditions forecasted by the World Bank could see traffic growth and profitability momentum continuing in 2018.

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