Gulf airlines post 11.7% passenger growth in May

Middle East airlines posted the biggest growth in passenger demand in the world in May, according to latest data released by the International Air Transport Association (IATA).

The region's carriers saw the strongest year-on-year traffic growth for any region at 11.7 percent last month compared to the same month last year.

But with capacity up 12.8 percent, load factor declined 0.7 percent to 73.5 percent, IATA said in a statement.

"Demand for air travel in the Middle East and Africa has benefitted from continued expansion in trade volumes since late 2011," it added.

Globally, IATA said growth was led by emerging markets. Compared to the year-ago period, overall demand rose 5.6 percent, while capacity climbed 5.2 percent pushing the load factor up 0.3 percent to 78.1 percent.

Tony Tyler, IATA’s director general and CEO, said: “Global economic performance remains a concern; however, demand for air travel continues to expand. The primary driver is growing demand for connectivity to emerging markets.

"The business environment has also improved compared to mid-2012 with some indications of easing weakness in the Eurozone. It’s still a tough environment, but there are some reasons for optimism in the second half of the year.”

This year airlines are expected to make $12.7bn profits this year on $711bn in revenues, representing a 1.8 percent net profit margin, or around $4 profit for every passenger.

“The average profit per passenger is just enough to buy a sandwich in most parts of the world. Aviation will have to do much better than that in order to attract the $4-5trn in capital investment that will be needed over the next 20 years to meet the demands for aviation-enabled connectivity,” said Tyler.

A recent IATA study supported by analysis from McKinsey & Company shows that in the 2004-2011 period airline investors would have earned $17bn more annually by taking their capital and investing it in bonds and equities of similar risk.

“We need to find ways to improve returns for investors. It will require fresh thinking across the aviation value chain and from governments as well,” added Tyler.

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