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KUALA LUMPUR, Oct 22 — Global passenger yields increased slightly in August with the support of both economy and premium class, said the International Air Transport Association (IATA).
In its August-Sept 2019 Airlines Financial Monitor report released today, IATA, however, said the global yields are still 2.7 per cent lower compared to their level of a year ago.
“Impacted by trade and economic developments, premium cabin yields had been moving downward in the last four months and this was reversed in August (0.2 per cent).
“Nevertheless, it is not possible to say that this is a trend change, given that the global economy is softening and the trade tensions have not been resolved. Economy class yields also moved up in August (by 0.4 per cent), continuing the trend of recent months,” said the association.
The premium-class passengers accounted for 5.1 percent of total international origin-destination traffic in the first seven months of 2019, which is marginally lower (0.2 pps) than the proportion in the same period a year ago. In terms of revenues, premium-class passengers accounted for 30.8 per cent of total passenger revenues which is higher (by 0.5 pps) compared to a year ago.
Premium passenger traffic growth underperformed its economy counterpart in most of the international routes except for North-Mid Pacific and Asia-Southwest Pacific. The slowdown in the pace of economic growth in major markets in Europe together with trade tensions affected premium passenger traffic in all of the international routes linked to Europe.
On the other hand, premium fare growth was above economy in most of the routes apart from Europe-southern Africa and the North Atlantic.
Meanwhile, the seasonally adjusted (SA) terms, industry-wide revenue passenger kilometres (RPKs) continued the moderate upward trend in August, while SA air freight tonne kilometres (FTKs) declined, following an uptick in July.
“In the past year, the slow-down in global economic activity resulted in a moderation in RPK growth. SA RPKs grew by 3.9 per cent year-on-year, but the pace remained below the long-run historical average of around 5.5 per cent. On the freight side, the industry continues to be affected by weak global trade and softer economic growth.
“In August, SA FTKs fell further by 4.4 per cent year-on-year in August. Taking into account the economic outlook and risks related to trade disputes, our expectation on the freight side remains downbeat,” it said.
The SA industry-wide available seat kilometres (ASKs) continued their upward trend for the third consecutive month in August. However, the year-on-year growth trend in SA ASKs is still soft compared to a year ago (3.7 per cent versus 6.7 per cent in August 2018) and lags the growth trend in RPKs.
“Available freight tonne kilometres (AFTKs) in SA terms declined in August following the increases of the last two months. The SA annual freight capacity growth rate, which was close to 5.0 per cent a year ago, eased to 1.9 per cent,” it said.
IATA expect airlines to remain cautious about adding new capacity both in passenger and freight side amidst global economic weakness and intensified trade tensions.
On fuel costs, the association said following the attacks on Saudi Arabia’s oil field, Brent crude oil and jet fuel prices at first increased sharply in September, However, the price pressure swiftly abated, supported by a faster than expected recovery in production.
Oil and jet fuel prices have returned to around pre-attack levels even though production has not been fully restored.
It said concerns regarding the global economic outlook have been weighing on oil prices, and more than offsetting the potential geopolitical risks.
The global airline share prices rose in September despite headwinds arising from airline collapses, strikes and geopolitical events with the European airline index performed best, recording its highest monthly gain of the last two years, despite higher oil prices and another airline collapse.
“A fragile economic outlook, together with Brexit uncertainty, makes preserving this performance challenging,” said IATA. — Bernama