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Falling tickets prices boosting air travel demand in 2015

[BERLIN] Falling airplane fares are helping to support strong growth in global air passenger traffic, the International Air Transport Association (IATA) said on Thursday.

Data shows fares have fallen 5 per cent over the first eight months of year, boosting leisure travel, IATA said, estimating that falling prices have contributed around 3 percentage points to traffic growth so far this year.

In the first 10 months of the year, passenger traffic rose 6.8 per cent, IATA said. In most parts of the world, growth in demand is outstripping the additional capacity being laid on by airlines, meaning planes are getting fuller.

But falling fares are forcing many airlines to seek cost savings, particularly as they deal with increased competition from low-cost carriers.

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Europe's biggest low-cost carrier Ryanair has predicted a fare war this winter and on Thursday published November traffic figures showing a 21 per cent jump in traffic and virtually full planes.

Travel stocks came under pressure following the attacks in Paris last month but industry experts expect the impact on Paris as a major tourist destination will be brief, and won't dampen people's overall desire to travel.

Business travel in Europe is also holding up, according to a survey published earlier on Thursday. "Acts of terror, whether they occur on a city street or at 30,000 feet, will not get the better of us, or succeed in limiting the possibilities of our world," IATA Director General Tony Tyler said in a statement.

For October, demand in terms of revenue passenger kilometres rose 7.5 per cent, following 7.4 per cent growth in September, IATA said in its regular monthly traffic figures. Load factor - how full planes are - rose 1.4 percentage points to 80.5 per cent.

"Load factors are averaging over 80 pe rcent and consumers are the big winners with fares trending downwards," Mr Tyler added.

IATA will on Dec 10 publish an updated outlook for industry profits in 2015 and 2016.


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