Tariffs, trade wars and Brexit are all taking a toll on the travel industry.
New data surrounding air passenger demand for July reveals that peak season for travel got off to an unusually sluggish start and officials from the International Air Transport Association (IATA) link the slump to the troubles occurring around the world.
According to IATA, total revenue passenger kilometers (RPKs) rose 3.6 percent in July compared to the same month in 2018. The figure is a marked decrease from the 5.1 percent annual growth recorded in June, IATA said.
“July’s performance marked a soft start to the peak passenger demand season. Tariffs, trade wars and uncertainty over Brexit are contributing to a weaker demand environment than we saw in 2018,” said Alexandre de Juniac, IATA’s director general and CEO. “At the same time, the trend of moderate capacity increases is helping to achieve record load factors.”
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International passenger demand for July rose just 2.7 percent compared to July 2018, which was a deceleration compared to the 5.3 percent growth recorded in June, IATA said.
Capacity climbed 2.4 percent, and load factor edged upward 0.2 percentage point to 85.3 percent. All regions reported growth, led by airlines in Latin America.
European carriers meanwhile registered a modest 3.3 percent annual growth in July, down from a 5.6 percent year-over-year increase in June, according to IATA’s figures.
This is the slowest rate of growth since mid-2016, IATA said.
Continuing uncertainty over Brexit and slowing German exports and manufacturing activity contributed to weakening business and consumer confidence.
Middle East carriers witnessed a 1.6 percent increase in demand for July, which is well down from the 8.3 percent growth recorded for June, after the end of Ramadan, said IATA.
Weakness in global trade, volatile oil prices and heightened geopolitical tensions have been negative factors for the region, according to IATA.
In North America, airline traffic climbed 1.5 percent compared to July a year ago. This was down from 3.5 percent growth in June, reflecting the slowdown in the U.S. and Canadian economies and the trade disputes.
Latin American airlines experienced a 4.1 percent rise in traffic in July, which was the strongest growth among the regions but a decline from 5.8 percent year-over-year growth in June.
The slump occurred amid continued disruption following the demise of Avianca Brasil and more challenging business conditions in some key regional economies.
Over the peak northern summer period, millions of people took to the skies to reunite with families, to explore the world or to simply enjoy well-deserved vacations, said IATA in a statement, while also pointing out that the aviation industry is working hard to ensure that the environmental costs of air travel are minimized.
“The carbon footprint of the average air journey this year is half what it would have been in 1990,” said IATA. “From 2020 overall net emissions will be capped. And realizing the full potential of sustainable aviation fuels will play a major role in our 2050 target to cut overall net emissions to half 2005 levels.”
The commentary about the carbon footprint of the average air journey comes amid growing criticism of the industry for its impact on global warming and increasing interest among travelers for offsetting the impact of their flights.