Traffic growth in key Asia-Pacific economies
The Asia-Pacific region should be the major contributor to the growth in air travel, as two-thirds of the growth in the next 20 years will involve countries in that region. According to the IATA (or International Air Transport Association), global air transport is expected to more than double, with half of the region’s growth led by China.
Traffic growth in the region, however, slowed to 4.9% in November from 5.5% growth recorded in October, and it is expected to remain weak due to the slowdown in regional production activity. In this article, we will see how key economies in the region performed during the month.
Key economies with a high growth potential such as China and India led the growth in the Asia-Pacific region.
- Domestic traffic in China increased at a strong rate of 15.4%, an increase of 5% from October despite a slowdown in Chinese economic and industrial activity. The growth in Chinese domestic traffic contributed to two-thirds of the global domestic traffic growth.
- Although traffic growth in Indian domestic markets slowed slightly compared to previous few months, it is still strong with double-digit growth of 14.2% in November.
- In Australia, traffic growth remained flat in November compared to a 3.4% growth in October. With the end of the mining-led boom and concerns over unemployment, consumer confidence is at a three-year low. The economy is expected to remain subdued in the short term.
- With the Japanese economy stabilizing in the fourth quarter, traffic growth picked up with 2.6% growth in November after weak domestic travel growth in the middle of the year.
The weak cargo revenue on Chinese airlines and currency depreciation has a negative impact on the Asia-Pacific market. US airlines such as Delta (DAL), American (AAL), Southwest (LUV), and JetBlue (JBLU) recorded higher profitability. Investors can invest in US airlines through ETFs such as the iShares Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN).