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OTHER ARTICLES Last modified on October 12, 2012

Global traffic trends

Rafael Echevarne and Patrick Lucas reflect on the findings of ACI’s World Airport Traffic Report (WATR), arguably aviation’s most comprehensive compendium of annual traffic statistics.

Although major international airports are always covered in ACI’s annual airport traffic reports, we make every effort to expand the data coverage on a yearly basis to include  smaller airports.

As compared with the year 2010, ACI increased the sample by over  200 reporting airports, mainly from Asia-Pacific (299 vs 172), Middle East (94 vs 52) and Europe (495 vs 454). European airports remain the  largest contributors to ACI traffic data, representing 33% of the  total sample, followed by 20% for Asia-Pacific and 17% for Latin America  & the Caribbean.

The world’s airports handled 5.4 billion passengers and 93,182,085 tonnes of cargo in 2011. About 70% of airports worldwide registered positive growth in 2011 (69% in 2010), while the remaining  30% reported a decline in passenger numbers.

Following the Great Recession of 2008/2009, the airport industry has shown a great level of resilience, achieving two consecutive years of unwavering increases in airport passenger traffic.

However, 2011 was a year where growth took place in the context of major environmental calamities in East Asia, political and social unrest in the Middle East and Northern Africa and the looming sovereign debt crisis in the Eurozone.

While this represents only a short list of the drawbacks that could have potentially hindered the rise in demand for air transport, the industry still recorded a 5.3% year-on-year increase in passenger traffic in 2011.

Retrospectively, 2011 could best be described as a year of social, political and economic uncertainty. And while the apparent downside risks had very little aggregate level impact on passenger traffic, trade  in airfreight was less forgiving of the imminent jeopardy in the  global economy.

Despite the inherent uncertainty that was associated with 2011, monthly passenger traffic was relatively stable, oscillating between  3% and 6% year-on-year throughout 2011.

With the exception of an abnormally high growth rate in April,  as a result of the depressed passenger figures from the Icelandic volcanic eruption, which paralysed European air space in April 2010, passenger traffic was relatively unfettered by global economic phenomena in 2011.

The combined effect of their rising per capita income and the demographic muscle makes markets such as Brazil, Russia, India, China, Indonesia and other South East Asian markets fertile environments for robust demand in air travel.

The 2011 report also introduces new sections, providing interesting insights into the airport industry.

While there is a tendency to focus on year-on-year growth patterns, it is also important to view airport traffic from a historical perspective. The 2011 report introduces seasonally adjusted time series analysis to clearly identify trends and events that mark the industry.

Global passenger numbers have increased by almost 46% since 2001, from 3.7 billion to 5.4 billion in 2011. Considering historical challenges, the industry has experienced a compounded annual growth rate of 4.1% over an 11-year period.


Negative shocks

This growth rate is remarkable considering the vast array of challenges that were confronted by the industry. Indeed, over the last decade, the airport industry was at the epicentre of many key events that had a direct impact on air transport demand. Thus, the historical assessment of global traffic shows both the vulnerability of air transport to external economic shocks as well as the long-term resilience of the industry as a whole.

The 2011 WATR shows an index of passenger and cargo traffic over time coupled with key events that impacted air transport. After adjusting for seasonality, negative shocks become quite apparent.

While the 9/11 tragedy in 2001 and the Severe Acute Respiratory Syndrome (SARS) crisis in 2003 created immediate sharp declines in passenger traffic, the 2008–2009 recession, which was primarily  triggered by the freeze in global credit, resulted in a more gradual  and prolonged decline.

The 9/11 attacks resulted in an overall decrease of 13% in passenger traffic over a period of eight months, whereas the SARS outbreak triggered a 10% decline. The Great Recession, starting December 2007 and ending June 2009, caused a 6% drop in overall figures.

Smaller disruptions such as the H5N1 virus (bird flu) in 2006 and  the volcanic ash clouds over Europe in 2010 are also clearly visible in  the series.

We were interested in looking at traffic concentration at the world’s largest cities, from both a passenger and cargo perspective.

As expected, London is the world’s largest air traffic market, with  134 million passengers handled in 2011 at the five airports serving the capital of the United Kingdom: Heathrow (LHR), Gatwick (LGW), Luton (LTN), Stansted (STN) and London City (LCY). As the only city in the world handling over 100 million passengers, London has 2.5% of the global passenger traffic market.

By virtue of considering the traffic at all the airports serving a market, cities such as Moscow, Istanbul and Houston make it to the top 20 list, whereas none of the individual airports at those destinations make it to the top 20 airport rankings. The top 20 cities handled a quarter of the world’s total passenger traffic (25%).

The concentration of cargo traffic is even higher than passenger  traffic. The world’s top 20 cities handled almost half of the world’s  total traffic (48%). Asia dominates, with eight cities in the top 20.  There are also seven US cities in the top 20 but it is important to  point out that, of these, the three largest ones are main logistic hubs  with relatively small passenger traffic (all handle fewer than  10 million passengers).

The level of activity of an airport is a combination of the amount of passengers, cargo and aircraft movements. A key challenge faced by the airport industry is to determine how to combine all of these into a single measure of production.

For instance, how many physical and financial resources of an airport company must be dedicated to accommodate a single passenger as compared with a kilo of cargo or an aircraft movement?

There have been a number of studies to determine this relationship. However, it should be noted that there is no agreed single measure that fully captures the individual realities of each airport.

WATR explores the different world airport rankings according to three different measures of airport output: Work Load Units (WLU), Airport Throughput Units (ATU) and Units of Airport Activity (UAA).

Some airports experience major fluctuations in terms of passenger throughput during the year. This is particularly common among airports that serve tourist destinations. Indices that monitor airport seasonality may offer insights into the potential for demand management during peak and off-peak periods as well as infrastructure utilisation.

In order to capture this, WATR analyses the seasonality ratio using both the Gini co-efficient and the simple seasonality ratio.


A difficult year – 2012

Whereas 2011 performed better than expected, 2012 is proving  to be a more difficult year. During the first five months of this year,  there was a very marked difference between the growth of passenger and cargo traffic.

By the end of May 2012, passenger figures continued to rise, but just below 5%, with international traffic growing faster than domestic traffic at 6% and 4% respectively. The fastest growing region is the Middle East, followed by Asia-Pacific and Africa.

Not surprisingly, the uncertain economic situation in Europe and North America resulted in these two regions having the lowest passenger growth, with rates below 3%.

Cargo and freight volumes were showing clear signs of a troubled international economy, with tonnage almost 2% below 2010 volumes for the first five months of the year. The biggest drop in cargo traffic was in Europe, with a decline of almost 5%, followed by Asia-Pacific, where traffic was 1.5% below 2010.

The only regions showing some modest growth were the Middle East and Latin America, both achieving rates of just above 3% and driven only by international traffic.

During the second quarter of 2012, the international economy showed signs of further weakness. The IMF predicts further deterioration in the global economy mainly as a result of the continuing financial problems in Europe and slower-than-expected growth in emerging economies.

According to its July report, the global economy is projected to grow at 3.5% in 2012 and 3.9% in 2013. Although there has been a downgrade in growth projections for all world regions, there is still a marked difference between the advanced and emerging/developing economies of more than five percentage points.

Although passenger traffic in 2012 is expected to grow, the significant slow-down of the economies in the BRIC countries, together with the continued economic troubles in Europe and the United States, means that the growth rate will be less than 5%.

Cargo traffic is expected to show a decline with respect to 2011 levels, mainly driven by the low business and consumer confidence in the largest international economies.


About the authors

Rafael Echevarne is ACI World's economics director and Patrick Lucas is the manager for statistics and economics.

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