Asia Pacific Airline Trends

Asia Pacific Airlines Record Robust Traffic Demand in 2017

- Expectations of sustained growth amid positive underlying market conditions

Preliminary traffic figures for the full calendar year 2017 released today by the Association of Asia Pacific Airlines (AAPA) showed that both international air passenger and air cargo markets enjoyed robust growth, underpinned by an acceleration in economic activity across most regions.

Supported by elevated business and consumer confidence levels, the region’s airlines carried a combined total of 316.8 million international passengers for the year, a solid 6.2% increase compared to 2016. Demand as measured in revenue passenger kilometres (RPK) increased by 8.2%, reflecting relative strength on long haul routes. Meanwhile, traffic demand within the region remained encouraging, supported by sustained regional economic growth. The average international passenger load factor rose by 1.2 percentage points to reach 79.9% for the year, after accounting for a 6.6% expansion in available seat capacity.

Broad based expansions in new orders precipitated by greater client demand helped boost trade activity significantly, following years of tepid performance. Correspondingly, international air cargo demand for the region’s airlines registered its fastest full year growth since the post-crisis rebound in 2010. In freight tonne kilometres (FTK) terms, demand rebounded with a strong 9.8% growth for the year, following a modest increase in 2016. Growth in demand outpaced the 4.4% expansion in offered freight capacity by a considerable margin, lifting the average international freight load factor by 3.2 percentage points to 65.2% for the year.

Commenting on the results, Mr. Andrew Herdman, AAPA Director General said, “Whilst competition remained intense, continued availability of affordable air fares and further expansion of routes, amid a positive global economic environment, culminated in a year of firm traffic growth for air passenger markets.”

“In addition, Asian airlines enjoyed solid increases in air cargo volumes through the year, with continued improvements in business conditions boosting trade activity as demand was transmitted through regional supply chains.”

“Overall, the region’s carriers in 2017 benefitted from the robust growth in demand, at the same time, notably higher load factors provided some relief to airline yields. However, increased cost pressures, particularly significantly higher jet fuel prices, in addition to continued market competition, constrained margins.”

Looking ahead, Mr. Herdman concluded, “The outlook for the year ahead is broadly positive, as the increase in new orders and recent pick-up in business investments are expected to enhance the sustainability of the global economic upswing. This will in turn lend support to air travel demand in the coming months. Nevertheless, market conditions remain highly competitive. As such, airlines are consistently pursuing new sources of additional revenue whilst keeping a tight rein on costs, to support ongoing investments in future growth opportunities.”

TRAFFIC UPDATE PRELIMINARY

International Scheduled Services of Asia Pacific Airlines

International

Dec-17

page2image25261472

Dec-16

% Change

Jan-Dec 2017

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Jan-Dec 2016

page2image25249936 page2image25249296

% Change

Passengers (Thousand)

28,503

page2image25238496

26,627

+ 7.0%

316,775

page2image4285760320

298,283

page2image4285773040 page2image4242421104

+ 6.2%

RPK (Million)

106,311

page2image4285771472

99,237

page2image4285836544

+ 7.1%

1,184,273

page2image4241175248

1,094,373

page2image4241173536
page2image4241178128 page2image4241178544

+ 8.2%

page2image4241177024 page2image4241177568

ASK (Million)

131,639

123,567

+ 6.5%

1,483,061

1,390,679

+ 6.6%

Passenger Load Factor

80.8%

80.3%

page2image4241211216

+ 0.5 pp

page2image4241212656

79.9%

78.7%

+ 1.2 pp

FTK (Million)

6,411

5,963

+ 7.5%

70,778

64,473

+ 9.8%

FATK (Million)

9,659

page2image25431616

9,148

page2image25433376

+ 5.6%

108,632

page2image4285845696

104,004

page2image4241216272
page2image4241217008 page2image4241219040

+ 4.4%

page2image4241220352 page2image4241220896

Freight Load Factor

66.4%

65.2%

page2image4285847264

+ 1.2 pp

65.2%

62.0%

page2image25439360

+ 3.2 pp

page2image25438064 page2image25442976

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