- Asia-Pacific carriers saw passenger growth of 5.2% in 2012 which was stronger than the 4.0% growth in 2011, though the 2011 figures were affected by the Japanese tsunami. The 2012 performance was in line with the global average and contributed about a fifth of the total industry growth. After a slow start, the fourth quarter was boosted by a revival in the Chinese economy and strengthening momentum in Asian exports and imports. Capacity expansion of just 3.0% for the year kept the load factor at a healthy average of 77.5%.
- European airlines’ passenger traffic expanded 5.3% in 2012, sharply down on the 9.5% growth of 2011. Growth was generated by the long-haul performance of Eurozone airlines (within-EU travel stagnated due to slow economic growth). Additionally, around a quarter of the growth in European airline international traffic came from airlines outside of the Eurozone (Turkey being a major contributor). Capacity increased by 3.1%, pushing the full-year average load factor to 80.5%. Combined with other benefits of industry consolidation, the European industry broke even on the year—a much stronger financial performance than would be expected under such harsh economic conditions.
- North American carriers reported the slowest international passenger growth of any region at 1.3% (down from 4.1% in 2011). Restructuring, consolidation, and tight capacity management (down 0.3% for the year) delivered the highest load factor (82.0%), contributing to an estimated $2.4 billion profit.
- Middle East airlines contributed almost a third of the total expansion in international passenger markets with 15.4% growth (ahead of the 8.9% growth recorded in 2011 that was impacted by the Arab Spring). This was achieved with a capacity expansion of 12.5% while improving the load factor to 77.4%. The region’s carriers increased the connectivity of their expanding hubs with significant increases in both network (destinations) and frequency. Despite the expansion, the improved load factor indicates that the growth is sustainable and that airlines in the region have been successful in attracting new passengers.
- Latin American carriers recorded 8.4% demand growth in 2012. This was the second-strongest performance (after the Middle East) and was supported by rising incomes and falling unemployment in the region (particularly Brazil). Capacity expanded more slowly than demand (7.5%) and the load factor stood at 77.9% for the year.
- African airlines had a solid year of growth, up 7.5%, as the continent’s economic expansion drove traffic demand. Capacity expansion of 7.1% was just below traffic growth. This improved the load factor to 67.1%, but it was still the weakest of all regions.
Domestic Passenger Demand
Domestic air travel grew by 4.0% in 2012. China (9.5%) and Brazil (8.6%) were the strongest performers. India was the weakest with a 2.1% contraction on 2011 levels. Total capacity growth (3.8%) was in line with demand (4.0%) and the domestic load factor stood at 79.5%.
- US traffic expanded by 0.8% in 2012 (down from 1.5% in 2011), and capacity grew by just half of that at 0.4%. This supported an 83.4% load factor—the strongest among the major markets. The slowdown reflects the maturity and subdued economic growth of the US market which accounts for about half of all domestic travel.
- China and Brazil showed the strongest demand growth in 2012, of 9.5% and 8.6% respectively. They both increased capacity, but Chinese capacity growth of 11.3% outstripped demand, whereas Brazil’s 4.8% was around half the traffic increase. Nevertheless, at 80.9%, Chinese load factor remained strong, and considerably higher than Brazil’s 71.8%.
- Japan’s domestic market saw demand grow by 3.6% in 2012 while capacity expanded by 2.3%. Japanese domestic demand continues to suffer from a weak economy that stalled the recovery from the 2011 earthquake and tsunami. Japan’s domestic market remains 7% smaller than pre-tsunami levels with the weakest load factor (62.0%) among the major domestic markets.
- Indian domestic travel shrank by 2.1% on 2011 levels. Weak economic growth was exacerbated by increasing operational costs, insufficient infrastructure, high taxes and onerous regulation. Capacity growth fell to 0.3% (from 16.2% in 2011) and the average load factor for the year was 72.9%.
Air Cargo (Domestic and International)
Air freight markets declined for a second straight year, falling a further 1.5% in 2012 after a 0.6% decline in 2011. Air cargo has come under pressure from a slowdown in world trade growth, and shifts in the freight commodity mix. Expanding emerging economies have driven demand for bulk items carried by sea, while economic weakness in the West dampened demand for high-value consumer goods transported by air. Freight capacity grew just 0.2% over the year, and the freight load factor was 45.2%.
- Asia-Pacific airlines (the largest players in the air cargo market) reported a 5.5% decline in demand and cut capacity by 2.4%. As the world’s major manufacturing center, the region suffered from the slowdown in demand from Western markets. The freight load factor, although remaining the highest of all regions at 56.1%, fell more sharply than anywhere else, hurting cargo profitability.
- European and North American carriers also saw falls in freight demand, of 2.9% and 0.5% respectively. European carriers increased its capacity by 0.3% which led to the load factor falling to 47.2%. North American carriers managed to reduce capacity by 2.0%, ahead of the fall in demand, but it still left the region’s freight load factor at 35.0%, the second weakest of any region.
- Latin American airlines saw freight demand decline by 1.2%, but capacity grew 4.9% over the year, leaving the load factor to fall to 38.3%.
- African and Middle Eastern carriers were beneficiaries of new trade lanes and developing trade links between the two regions. Freight demand grew 7.1% and 14.7% respectively, both improvements on 2011 when the Middle East expanded 8.2% and Africa declined by 2.1%. The Middle East had the fastest capacity expansion of any freight region (11.4%) but the load factor still improved to 44.8%. Africa’s freight capacity grew 9.2%, outstripping demand. The freight load factor fell to just 24.7%, the lowest of any region by a significant margin.
Air Cargo Basically Flat