The August global passenger traffic numbers that came out this week brought more encouraging signs for our industry. Passenger demand again grew at above the historical growth rate, increasing 6.4 percent compared to the same period last year.
The eye-opening statistic, though, was the global passenger load factor of 85.3 percent. That is the highest monthly percentage since at least 1990, according to IATA.
Now, July and August are traditionally the busiest travel months so load factors tend to be higher. But even when we account for seasonality and look at the rolling 12-month average, August was still the highest percentage – at 81.1% – that we have seen since at least 2010.
The numbers reflect a trend that we have seen and you have probably noticed: Airplanes are flying fuller than ever before.
Yes, more people are taking to the skies, but many airlines have tried to remain disciplined about adding capacity while leveraging advancements in revenue management methods and tools to better manage demand. This has driven higher load factors while maintaining healthy yields, all of which have contributed to the health and profitability of the airline industry.
A decade ago, the annual passenger load factor was 76 percent. This year, we’re on track to again exceed 81 percent. Five percentage points are significant when we are dealing with nearly 10 trillion in annual available seat kilometers (ASKs). By maintaining a load factor of 81 percent vs. 76 percent, we are talking about 500 billion of additional revenue passenger kilometers (RPKs) a year for the industry.
Another way to look at this is to consider the number of seats annually. Five percentage of the industry’s 5.5 billion seats translates to about 275 million additional passengers carried each year.
One might think that if airlines are becoming more productive with the airplanes they have, they won’t order as many new airplanes. While that may be the case in the short term, the longer-term result is a healthier and more profitable industry, one that can afford to order and take delivery of more jetliners.
Our team closely tracks regional and global load factors and factor that into our annual Commercial Market Outlook (CMO). And the performance in August, and so far this year, give us even more confidence that our industry is on solid footing and on track to take delivery of 42,000 airplanes over the next two decades. (Learn more about our CMO while on the go by downloading our handy app on the App Store or Google Play.
What do you think? How high can global passenger load factors go? There was a time when we thought 80 percent was not possible.