The International Air Transport Association (IATA) released global traffic results for July showing slower growth in both air travel and freight, but with considerable variation by region and market. July passenger demand in aggregate was 3.4 percent higher than the same month last year, compared to a 6.3 percent increase in June and average growth of 6.5 percent over the first half of the year. This slowdown in travel growth is being driven largely by the recent fall in business confidence in many economies. July freight demand was 3.2 percent lower than it was in the same month last year. This is down from the 0.1 percent year-on-year growth rate of June. A large part of that decline was due to a comparison with a relatively strong July last year, but overall the trend in air freight is weak, in line with subdued world trade growth.

Airlines have responded to this slower growth environment by reducing the capacity added to markets, a move which has stabilized load factors at relatively high levels and provided some support for profitability in the face of high fuel prices. In July passenger capacity rose 3.6 percent, in line with the expansion of traffic, keeping the load factor at a relatively high 83.1 percent.

“The uncertain economic outlook is having a negative impact on demand for air transport,” said Tony Tyler, IATA’s director general and CEO. “The cargo business is 3.2 percent smaller than it was a year ago. And passenger markets -- with the exception of Africa, China-domestic and the Middle East -- saw demand fall from June to July. Overall passenger demand is still up 3.4 percent on the previous July. But the growth trend is clearly slowing. This, along with rising fuel prices is likely to make it a tough second half of the year.”

July international passenger demand was up 3.5 percent compared to the year-ago period, exactly in line with a 3.5 percent expansion in capacity. Load factors stood at 83.3 percent. The slowdown becomes evident when comparing to the previous month (June) when the year-on-year rate was 7.5 percent. Growth on average during the first half of the year was also 7.5 percent. The slowdown in international air travel growth has been concentrated in the past few months, in line with the decline of business confidence. Weakness in some key domestic air travel markets has been evident for rather longer period. Only African and Middle Eastern carriers showed month-to-month growth. Carriers in all other regions reported aggregate declines for international demand for July compared to June.

European carriers recorded 4.8 percent growth (down from 7.3 percent in June) on international services compared to July 2011 with an average load factor of 85.7 percent. That was a relatively modest slowdown from the 6.5 percent average growth seen during the first half of the year. Despite the recession in many European home markets, airlines from the region have been able to sustain growth on long-haul markets to regions where economic growth is stronger.

North American airlines’ international traffic fell 2.1 percent year-on-year in July (after rising 1.6 percent in June) in part owing to decisions to trim capacity, particularly on the North Atlantic market. Compared to June (the previous month), demand contracted by 1.3 percent. The load factor was 86.7 percent, the highest among all regions.

Asia-Pacific carriers saw demand growth of just 0.9 percent. This is a major slowdown from the 5.8 percent recorded in the June year-on-year comparison. Moreover, compared to the previous month (June 2012), demand contracted by 1.3 percent. European airlines appear to be benefiting more than Asia-Pacific airlines from the recently stronger trade flows from West to East, while the Middle Eastern airlines continue to offer strong competition on long-haul markets. The downward growth trend began in the second quarter of 2012 and has now continued into the third.

Latin American airlines posted growth of 5.7 percent, second highest among the regions. The load factor stood at 82 percent. The region’s carriers, however, could not buck the slowdown trend, after average growth of 10.1 percent in the first half of the year. Recently key economies in the region, such as Brazil, have seen an interruption to economic growth, which has affected travel and freight.

Middle East carriers experienced the strongest traffic growth at 11.2 percent year-over-year, although this was surpassed by a 12.4 percent rise in capacity. Compared to June, traffic rose just 0.1 percent. The region’s growth trends were impacted by Ramadan, which commenced in July this year.

African airlines’ traffic climbed 5.2 percent year-on-year, below a 6.3 percent rise in capacity. Load factor was 73.1 percent, by far the lowest of any region. The continent’s airlines have seen strong growth of 10.8 percent on average during the first half of the year. This has partly been a rebound from the Arab Spring, but also reflects the relative success of many African economies at present.

Domestic markets also experienced slow growth, continuing the trend that began early this year. In total, traffic rose 3.1 percent year-on year, down from 4.2 percent in June. However, the slowdown was not universal, with China and Brazil recording strong growth that was offset by weakness in India and Japan.

China’s domestic market rebounded sharply from the slowdown earlier this year to post 9 percent demand growth in July, up from the 7.8 percent year-over-year growth seen in June. With capacity up 12.1 percent, load factor slipped to 84.1 percent from 86.5 percent last year.

Japan’s domestic market rose just 4.2 percent versus the year-ago period and actually slipped 1 percent compared to June. Capacity rose 7.9 percent and load factor was the lowest for any market at 58.7 percent. Overall the market has contracted 4 percent this year and is 10 percent smaller than pre-earthquake levels.

U.S. traffic slipped 0.4 percent in July while capacity rose by 0.2 percent. Load factors dipped to 86.8 percent from 87.4 percent last year, still the highest among all the domestic markets. Brazil experienced the strongest growth after China, with traffic up 8.5 percent on a 3.0 percent rise in capacity. Load factor rose to 77.7 percent from 73.8 percent last July. However growth softened compared to June, declining 2.3 percent.

Indian domestic traffic fell 1.1 percent compared to a year ago, the worst performance for any market, reflecting the weakening economy among other factors. After expanding at 20 percent-plus rates through 2010 and early 2011, the Indian market stopped growing at the end of 2011. July capacity rose 2.1 percent, dropping the load factor to 69.6 percent from 71.8 percent last year.

Total passenger traffic market shares by region of carriers in terms of Revenue Passenger Kilometers are Europe 29.8 percent, Asia-Pacific 27.5 percent, North America 27.3 percent, Middle East 7.8 percent, Latin America 5.3 percent, and Africa 2.4 percent. Total freight traffic market shares by region of carriers in terms of FTK are: Asia-Pacific 39.4 percent, North America 22.7 percent, Europe 21.8 percent, Middle East 12.1 percent, Latin America 2.9 percent, Africa 1.3 percent. IATA represents some 240 airlines comprising 84 percent of global air traffic.