Low fares keep global air travel strong despite “negative influences”: IATA

Low fares keep global air travel strong despite “negative influences”: IATA

GENEVA — The global air passenger market showed resilience into the peak summer period, with lower fares helping to offset more negative influences on demand, according to the latest report from IATA.

Annual growth in industry-wide traffic accelerated to 5.9% year-on-year in July – the fastest pace in five months. And while the industry-wide load factor edged down in July, it remains high at 83.7%, just 0.1 percentage point lower than the record July high reached last year.

Meanwhile Q2 results point to another solid quarter for industry profitability and cash flow, “although CFOs report that they no longer expect further improvement in profitability over the next 12 months,” says IATA. Global airline share prices fell by 1.6% in August, and remain well down on where they started the year. North American airlines continue to outperform their counterparts in other regions of the world.

IATA noted that premium airfares have held up better than their economy counterparts on many of the key premium routes so far this year, and the segment continues to offer a buffer for overall airline financial performance.

Oil prices rallied during much of August, driven by expectations that major producers may act to freeze supply. But concerns about oversupply resurfaced towards the end of the month, and oil prices ended August back around US$47/bbl. Analysts said they expect oil prices to remain below US$55/bbl for the foreseeable future.

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