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Montreal—Geneva SUMMARY OF PASSENGER AND FREIGHT TRAFFIC Passenger and freight traffic World scheduled passenger and freight traffic by region of airline domicile – Revenue Tonne-Kilometres (millions) Asia Pacific 34.3% Europe 26.3% LOAD FACTOR Revenue Passenger-Kilometers (millions): Africa 2.2% 8,329,776 Latin America 4.5% Available Seat-Kilometers (millions): 81.9% 10,174,828 North America 22.4% Middle East 10.4% Share of Revenue Passenger- Kilometres by Airline Type LOAD FACTOR Freight and Mail Tonne-Kilometers (millions): 262,333 Traditional/Legacy 75% Available Freight Tonne Kilometers (millions): 532,000 49.3% Low cost 22% Leisure 3% OPERATING AND NET RESULTS (US$ millions) IN THIS VERSION OF 2010 27,600 17,300 2011 19,800 8,300 2012 18,400 9,200 2013 25,300 10,700 2014 35,450 13,802 2015 61,962 35,971 WATS2019 2016 60,144 34,191 2017 56,600 37,600 2018* 47,000 30,000 *Preliminary Operating Result Net Result TOP AIRLINES BY RPK AND FTK Top 10 Passenger (RPK) Top 10 Cargo (FTK) American Airlines 330,577 Federal Express 17,499 Delta Air Lines 330,034 Emirates 12,713 United Airlines 329,562 Qatar Airways 12,695 Emirates 302,298 United Parcel Service 12,459 Southwest Airlines (2) 214,561 Cathay Pacific Airways 11,284 China Southern Airlines (3) 200,239 Korean Air 7,839 Ryanair (4) 170,900 Lufthansa (3) 7,394 China Eastern Airlines 166,282 Cargolux 7,322 Air China 161,199 Air China 7,051 Lufthansa (3) 158,986 China Southern Airlines (3) 1 6,597 * Airline has additional notes, please refer to Ranking Table 4.1 * Airline has additional notes, please refer to Ranking Table 4.2 TRAFFIC BY ROUTE AREA Percentage of international scheduled Revenue Passenger-Kilometers North Europe Asia America 7.8% 12.1% 10.4% 7.8% 18.9% 13.9% 5.4% 3.0% 0.5% 2.0% 7.7% 3.2% 1.3% 0.3% 3.6% Middle Central America 2.1% Caribbean East 1.7% 3.7% 0.7% 1.3% Africa 2.4% 0.9% South Southwest America Pacific TRAFFIC BY ROUTE AREA Percentage of international scheduled Freight Tonnes-Kilometers North Europe Asia America 23.6% 13.5% 21.4% 23.6% 2.8% 9.0% 5.6% 0.6% 0.8% 2.5% 6.8% 1.2% 0.9% 0.0% 2.5% Middle Central America 2.2% Caribbean East 1.2% 3.0% 0.2% 0.9% Africa 3.2% 0.3% South Southwest America Pacific 2 Industry Economic Analysis Another solid year for air transport in 2018, despite a more challenging business environment Passenger demand showed robust growth again in 2018 In 2018, the demand for air passenger services remained solid, with industry-wide revenue passenger kilometers (RPKs) increasing by 7.4% over the year as a whole. Although this represents a slowdown from the decade-high pace recorded in 2017 (around 8%) it still exceeded the long-run industry average growth rate by around 2 percentage points. Air passenger demand was supported by a generally solid global economic backdrop, especially earlier in the year, which in turn supports jobs, incomes and business activity, as well as the strong competition in the industry which helps to ensure airfares remain affordable to travelers. Chart 1: RPK Versus World GDP Growth Source: IATA, IMF WATS 2019 3 World Air Transport Statistics China adds the most number of passenger journeys in 2018 With close to 4 billion origin-destination (O-D) passenger journeys worldwide in 2018, domestic routes within China again provided the largest incremental increase globally in the number of passenger trips, adding just under 50 million journeys. The domestic markets of the United States and India once more ranked second and third, with around 30 million and 18 million more passenger journeys, respectively. Of the main domestic markets that we regularly track, Domestic India showed the fastest growth, with the number of passengers increasing by 18.5% in 2018. Highlighting the consistently strong performance in this market, in October, India recorded its 50th consecutive month of double-digit year-on-year growth in RPKs. Chart 2: Top 10 Increasing O–D Markets in 2018 China domestic US domestic India domestic Indonesia domestic Russia domestic Mexico domestic Spain domestic Japan domestic Brazil domestic Iran domestic 0 10 20 30 40 50 Source: IATA DDS 4 WATS 2019 Industry Economic Analysis Domestic US remains the world’s largest single O-D passenger market in 2018 Although the domestic China market added more passenger journeys in 2018, the domestic US market continues to be the world’s largest single market, with almost 590 million passenger journeys undertaken in 2018. Domestic China comes a close second, with 515 million, followed by domestic India some distance back, at 116 million. Unsurprisingly, the domestic markets dominate the ranking, with UK-Spain the first international country pairing at #10. The top 12 markets shown account for almost half of the total number of O-D passenger journeys in 2018. Chart 3: Largest O-D air passenger markets, 2018 Source: IATA DDS WATS 2019 5 World Air Transport Statistics Air freight demand growth eases in 2018 Following a year of very strong growth in 2017, where industry-wide freight tonne kilometers (FTKs) increased by 9.7% buoyed by the global inventory restocking cycle, 2018 delivered a considerably weaker performance for air freight. FTKs increased by 3.4% last year overall, growing in line with global trade volumes despite trending broadly sideways in the first part of the year and actually contracting in Q4. This partly reflected the typical slowdown which follows an inventory rebuild, however, the second half of the year also saw the industry facing a number of headwinds including a moderation in world trade – in part a result of the heightened trade tensions between the US and China – and deterioration in some of the key leading indicators, such as the new export orders component of the global Purchasing Managers Index. Having said that, not all air freight sectors were equally affected with e-commerce and pharmaceuticals continuing to perform very strongly. Chart 4: Air freight versus global goods trade growth Source: IATA, Netherlands CPB 6 WATS 2019 Industry Economic Analysis Regional outcomes for passenger and freight demand were mixed At a regional level, 2018 saw a varied performance in passenger and freight demand. On the passenger side, airlines from the Asia-Pacific led the way, with growth over the year of 9.5%, followed by Europe and Latin America. For freight, Latin American carriers were the outperformer, followed by the North American carriers. Freight volumes carried by the African airlines were stable in 2018, but this should be viewed in the context of the very strong 24% growth in 2017. Chart 5: Regional passenger and freight demand outcomes Source: IATA WATS 2019 7 World Air Transport Statistics A new record high passenger load factor as demand growth exceeds capacity On the passenger side, global available seat kilometers (ASKs) increased by 6.9% in 2018 compared with 2017, slightly slower than the increase observed in passenger demand (RPKs increased by 7.4% in the year). For freight, available freight tonne kilometers (AFTKs) grew by 4.5% year on year in 2018, easily outpacing the 3.4% growth in FTKs. As a result, the passenger load factor (PLF) ticked up slightly to a new record high level of 81.9% for the year. Putting this into context, the PLF has risen by more than 10 percentage points over the past 15 years. This increase has been an important structural change which has supported the improved industry financial performance of recent years (see also Chart 9). The freight load factor, however, fell by around one percentage point in 2018, partly unwinding the gain observed in 2017. Chart 6: Industry-wide passenger and freight load factors Source: IATA 8 WATS 2019 Industry Economic Analysis A bumpy ride for oil prices in 2018 The jet fuel price opened the year around $80/bbl and was relatively stable initially.