Falling Fares Boost Air Travel Demand

Falling airfares are helping to support strong growth in global air passenger traffic, according to IATA.

Data shows fares have fallen 5 percent over the first eight months of the 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 percent.

In most parts of the world, demand growth is outstripping extra capacity, but falling fares are forcing many airlines to seek cost savings, particularly as they deal with increased competition from low-cost carriers.

Europe's biggest low-cost carrier Ryanair has predicted a fare war this winter and published November traffic figures showing a 21 percent 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.

"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 km rose 7.5 percent, following 7.4 percent growth in September, IATA said in its monthly traffic figures. Load factor rose 1.4 percentage points to 80.5 percent.

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

IATA will publish an updated outlook for industry profits on December 10.

Source: Reuters