July Traffic Growth Checked by Slowing BRIC Economies

 - September 9, 2013, 10:20 AM
Brazilian domestic traffic fell 0.6 percent in July as inflationary pressures continue to mount. (Photo: Airbus)

Growth in global airline traffic–both passenger and cargo–continued a positive trend during the month of July, as revenue passenger kilometers increased 5 percent and freight ton kilometers rose 1.2 percent over the same month in 2012, according to a pair of reports issued last week by the International Air Transport Association (IATA). However, IATA’s July figures highlighted a weakening of Asian performance and reinforced projections for slowing growth in Brazil, Russia, India and China–the so-called BRIC countries–by Airports Council International (ACI). A separate report issued by ACI World showed a modest 3-percent growth rate during the first five months of the year. ACI World reported a combined 4.4-percent growth rate among all regions last year compared with 2011.

“Passenger demand continues to be strong,” said IATA director general Tony Tyler. “But the story of emerging markets driving growth as developed economies stagnate could be shifting. We are expecting growth of 5 percent this year. How the growth is achieved, however, appears to be at a turning point.”

ACI issued a still less optimistic outlook, projecting passenger growth rates this year to finish “well below” 5 percent, while cargo traffic shows a decline compared with last year. “Overall, the traffic outlook for 2013 is not encouraging,” said Dr. Rafael Echevarne, ACI World’s director of economic and program development. “Although passenger traffic in 2013 is expected to grow, emerging markets in the BRIC countries are beginning to experience slowed growth.”

IATA’s passenger report for July indicates a 10.7-percent increase in domestic demand in China compared with the same month last year; it reflects a retreat from the 14.5-percent year-over-year growth recorded in June and suggests “the first signs of weakness” in the country’s air travel market.

Brazil, meanwhile, saw traffic fall 0.6 percent, making it the only market to experience a decline as inflationary pressures mounted and consumer demand showed continued fragility, said IATA.

Although Russia showed the strongest growth, as domestic traffic rose 11.9 percent during July compared with 9.8 percent in June, IATA noted that July business activity indicators show a decline in both the manufacturing and services sectors, factors that “should” affect travel demand.

Finally, Indian domestic traffic rose 6 percent year-over-year, reversing a 2.4-percent decline in June. However, said IATA, continuing volatility over recent months has made it difficult to establish a clear growth trend.