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10
Jan

Airline travel up 6% in 2016

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By Miguel R. Camus | Philippine Daily Inquirer

The International Civil Aviation Organization (Icao) said more people traveled last year, with growth getting a big boost from low-cost carriers.

Icao, a specialized agency of the United Nations overseeing international civil aviation standards, said in a statement that there were some 3.7 billion people who took a scheduled flight in 2016, a figure that was 6-percent better than the previous year.

It noted that revenue passenger kilometers (RPKs), which calculate passengers who bought airline tickets relative to the distance they traveled, hit 7,015 billion RPKs. The figure was up 6.3 percent from 2015, but slower than the 7.1-percent growth recorded in 2014.

Those conditions, plus the cheaper cost of oil, a major operating expense, also helped airline profitability in 2016, Icao said.

The airline industry likely posted a record operating profit of $60 billion in 2016, up from $58 billion the year before. Industry-wide operating margin was stable at 8 percent, Icao said.

“For a consecutive year, more than a third of the profits are expected to come from the carriers of North America, whose domestic market represents 66 percent of their total operations,” Icao said.

“Improving economic conditions forecast by the World Bank will see traffic growth and air carrier profitability momentum continuing in 2017,” it added.

As noted, low-cost carriers, also called budget airlines, have been widening their reach around the world.

According to Icao, about a billion passengers, 28 percent of the world’s total scheduled passenger traffic, were served by low-cost carriers. Budget airlines in Europe accounted for 32 percent, followed by Asia-Pacific and North America with 31 percent and 25 percent, respectively.

“The increasing presence of low-cost carriers notably in emerging economies have contributed to the overall growth of passenger traffic,” Icao said.

The fall in traveling costs also helped the industry post growth, despite the broader slowdown in the global economy.

“The revision [in global growth] is due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade and diminishing capital flows,” Icao said.

“Despite the weak economic conditions, global passenger traffic continued to grow, helped by the lower air fares owing to the fall in oil prices,” it added.

Load factor, which measures capacity utilization of an airline, was down last year as airlines expanded their fleets.

Icao noted that total capacity in 2016 went up by 6.2 percent. With demand unable to catch up, airline load factor slipped slightly lower from 80.4 percent in 2015 to 80.3 percent in 2016.