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IATA forecasts subdued outlook for Australian domestic market

written by WOFA | February 9, 2015

Australia's domestic carriers at Sydney Airport. (Seth Jaworski)
Australia’s domestic carriers at Sydney Airport. (Seth Jaworski)

Australia’s domestic carriers will have to battle sluggish consumer confidence in the period ahead as the local economy deals with the ongoing impact of the mining slowdown, the International Air Transport Association (IATA) says.

IATA’s latest passenger traffic numbers show the Australian domestic market recorded capacity growth, measured by available seat kilometres (ASK), of 1.4 per cent in calendar 2014, less than half the 3.8 per cent growth recorded in the prior year.

Meanwhile, passenger demand, measured by revenue passenger kilometres, rose 1.8 per cent, compared with 2.8 per cent in calendar 2013.

“Volumes have been tracking sideways since the middle of 2013 as the economy has struggled to rebalance away from mining investment-led growth,” the IATA report said.

“With consumer confidence at a three-year low, the near-term outlook remains subdued.”

The most recent figures from the Australian Bureau of Statistics showed the national economy grew by just 0.3 per cent in the three months to September 2014. It was the slowest rate of growth since the economy went backwards due to the floods and cyclones in northern Australia at the start of 2011.

And in a further indication the Australian economy was struggling, the Reserve Bank of Australia lowered the cash rate by 0.25 percentage points to 2.25 per cent at its February board meeting.


Overall, IATA said about 3.3 billion passengers boarded an aircraft around the world in 2014, an increase of about 170 million from the prior year.

With growth in global passenger numbers outpacing the rise in ASKs, load factors increased 0.2 percentage points to 79.7 per cent.

All regions experienced an improvement in RPK, although the performance was mixed. For example, the Middle East posted double-digit growth, while capacity and passenger numbers went backwards in Africa, IATA said.

“Demand for the passenger business did well in 2014,” IATA chief executive Tony Tyler said in a statement.

“While it is clear that people will continue to travel in growing numbers, there have been signs in recent months that softening business confidence is translating into a levelling off of international travel demand.”

Asia Pacific carriers posted a 7.5 per cent increase in capacity, with passenger growth at 7.1 per cent.

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