Passenger traffic in Middle East grows 11.7%

Dubai:

Middle East carriers have seen the strongest year-on-year passenger traffic growth for any region at 11.7 per cent, according to an International Air Transport Association (IATA) report on global passenger traffic results for May.

Air travel has continued to expand at a healthy rate globally, according to IATA, with the strongest growth occurring in the emerging markets of Africa, Latin America and the Middle East. Compared to the year-ago period, overall demand rose 5.6 per cent, while capacity climbed 5.2 per cent pushing the load factor up 0.3 percentage points to 78.1 per cent.

May international passenger demand rose 5.7 per cent compared to the year-ago period, with capacity up 5.6 per cent. Load factor was flat at 77 per cent.

“Global economic performance remains a concern; however, demand for air travel continues to expand. The primary driver is growing demand for connectivity to emerging markets,” said Tony Tyler, IATA’s Director General and CEO. “It’s still a tough environment, but there are some reasons for optimism in the second half of the year.”

Demand for air travel in the Middle East and Africa has benefited from continued expansion in trade volumes since late 2011. But with capacity up 12.8 per cent, load factor declined 0.7 percentage points to 73.5 per cent.

The demand for air travel continues to be strong despite less-than-robust economic indicators in some key markets, IATA said. This year airlines are expected to make $12.7 billion profits, which on $711 billion in revenues, is a 1.8 per cent net profit margin, or around $4 profit for every passenger.

“The average profit per passenger is just enough to buy a sandwich in most parts of the world. Aviation will have to do much better than that in order to attract the $4-5 trillion in capital investment that will be needed over the next 20 years to meet the demands for aviation-enabled connectivity,” said Tyler.

A recent IATA study supported by analysis from McKinsey & Company shows that in the 2004-2011 period airline investors would have earned $17 billion more annually by taking their capital and investing it in bonds and equities of similar risk. “We need to find ways to improve returns for investors. It will require fresh thinking across the aviation value chain and from governments as well,” Tyler said.

— Writer is an intern at Gulf News