International aviation industry still robust

Initial airline financial results from second quarter of 2017 have been more robust than earlier in the year, and suggest that the squeeze on profit margins from higher costs and weak yields peaked in first quarter, according to the International Air Transport Association (IATA).

Meanwhile, having trended downwards since 2013, the latest monthly data suggest that passenger yields have now started to trend upwards. Exchange rate-adjusted yields were broadly unchanged from their year-ago level in May.

Global airline share prices fell in July, driven by a decline in the North America index. Having seen airline shares outperform global equities over the past year, July’s decline appears, in part, to reflect profit taking by investors.

Brent crude oil prices rose back above US$50/bbl in July, and ended the month nearly 10% higher than they started it. Nonetheless, the futures market remains consistent with just a modest increase in prices over the medium term.

Passenger and freight demand growth posted their strongest first half of the year since 2005 and 2010 respectively.

The seasonally-adjusted passenger load factor remained broadly stable close to an all-time high over the same period, while the freight load factor recovered to its highest level in more than two and a half years.

The pick-up in global trade is helping to support premium passenger demand, particularly to, from and within Asia Pacific. Premium revenues have risen in year-on-year terms on key routes to and from the region so far in 2017.