Global air passenger traffic rose 6.3% overall last year (2016), largely due to demand of almost 9% annual growth pace between June and December, according to the International Air Transport Association’s (IATA) full-year Air Passenger Market Analysis.
Overall capacity was up 6.2% compared to 2015; the total air passenger market load factor (PLF) for the year was 80.5%, a record full-year average high, IATA added. See the full transcript here.
Looking at the international passenger market sector, traffic increased by 6.7% in 2016 and capacity by 6.9%, while the aggregated load factor fell by 0.2 percentage points to 79.6%. Nevertheless, all regions reported year-over-year (YoY) increases in demand.
IATA noted that Asia Pacific carriers recorded a demand increase of 8.3% compared to 2015, which was the second-fastest increase among the regions (Middle East was first).
This pace is considerably ahead of the five-year growth average of 6.9%. Capacity rose 7.7%, pushing up the load factor 0.4 percentage points to 78.6%.
The strength of Asian carriers is corroborated by figures from the Association of Asia Pacific Airlines (AAPA), which reaffirmed continued solid growth in demand for international air travel in the second half of 2016 after a weak start.
Boosted by the widespread availability of competitive airfares and continued expansion in network connections, the Asian airlines carried a combined total of 293 million international passengers in 2016, representing a 6.0% growth compared to the previous year.
The average international passenger load factor rose by 0.3 percentage points to reach 78.7% for the year, after accounting for a 6.6% increase in demand as measured in revenue passenger kilometres (RPK) and a 6.3% expansion in available seat capacity (Click here).
Malindo’s new shareholder
In a rather surprising move, Malaysia’s National Aerospace & Defence Industries (NADI) has whittled down its stake in low-cost carrier Malindo Airways to 5%, from 51% (Read here).
While there have been talks of NADI and its joint venture partner – Indonesia’s Lion Group – having fallen out in the past year, the size of the divestment suggests the relationship amongst the two has soured badly.
The LCC’s CEO, Chandran Rama Muthy and his wife now hold 46% equity in Malindo Air. The rest of the company is controlled by the Lion Group, whose owner is the Indonesian businessman and politician Rusdi Kirana.
It is unclear if the change in shareholding will impact the airline’s Air Service Licence (ASL). Typically an ASL would take into account the credit profile of an airline’s stakeholders and if they comply with Malaysia’s investment guidelines.
Malindo Air was launched in 2012 with much fanfare, with the venture touted as indicative of the strength in Indonesian-Malaysian bilateral relations. NADI’s role in the alliance was always going to be in the background, providing maintenance, repair and overhaul (MRO) services while the Lion Group provides the aircraft.
This latest change in the company’s financial profile comes, rather interestingly, as Rusdi Kirana prepares to take on the mantle of Indonesia’s ambassador to Malaysia.
Rusdi has come a long way from his days as a typewriter salesman and tour operator; today he is a member of Indonesia’s Presidential Advisory Board as well as deputy chairman of the National Awakening Party (NAP) – ironic it may seem at first glance, since the NAP is an Islamic group and Rusdi is a Chinese Christian (Read the FT’s interview with Rusdi).
What is clear is that with Rusdi now having a more influential role in Malaysia-Indonesia ties, and at the same time having his preferred CEO Rama Muthy holding a large chunk of Malindo shares, the stage is set for a battle royale between the Lion Group and Malaysia-based airlines, especially AirAsia and Firefly.