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Worldwide airline share prices were up 9% in October compared to September, supported by low jet fuel prices and strong Q3 profit results. Airline shares outperformed the broader market, which was up 7% over the month- reveals the latest Airlines financial monitor by The International Air Transport Association (IATA)

According to the report, broader  equity markets were  also  up,  supported  by  the  low  interest  rate environment  and  rebounds  in  the  Chinese  stock market.

But  airline  shares  outperformed  the broader  market,  with  the  FTSE Global All  Cap rising  7%  over  the  same  period.  The strong rise in  airline  share  prices  was  supported  by  robust Q3 financial results as well as continued low fuel prices. Airline share prices in all major regions were up in October, but rose most in the US, with an increase of 12% over the month.

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Air  transport  volumes  increased  again  in September,  sustaining  the  robust  growth  trend after a moderation mid-year. Weakness in some emerging markets,  including  China,  has  been placing downward pressure on global economic growth.  However,  growth  in  RPKs,  particularly the  more  price  sensitive  economy  class  leisure travel, has received some help from lower fares

Air freight  volumes  expanded  in  September compared to August. The pick-up is a welcome change  after  months  of  decline  throughout 2015. That said, the improvement was narrowly based  –  driven  mostly  by  European  airlines  – and  the  demand  backdrop  remains  fragile  due to weakness in emerging markets.

Growth in seats

Growth  in  available  seats  slowed  considerably in September, down to  a 0.2% rate of increase compared  to  August.  Although  new  aircraft deliveries  went  up  in  September  (132), compared  to  August  (120),  there  was  a  net increase in storage activity over the period, from 23 in August to 51 in September. Growth in the number  of  seats  slowed  to  a  2.5%  annualized rate  in  September,  which  is  well  below  the current  growth  in  demand  and  should  help boost loads and aircraft utilization rates.

Passenger loads dipped

Passenger  load  factors  slipped  slightly  in September  after  reaching  a  record  high  in August – 80.6% on a seasonally adjusted basis. The  small  decline  in  seasonally  adjusted  load factors  resulted  from  a  stronger  pick-up  in capacity  compared  to  demand.  But  generally, over the past several months, load factors have been  improving  due  to  gains  on  domestic markets.

Cargo  load  factors  were  broadly  stable  in September,  supported  by  the  expansion  in FTKs.  Air  freight  load  factors  have  been  in decline since Q1 2015, down to levels not seen since mid-2009, on a seasonally adjusted basis.

Fuel costs

Crude  oil  prices  have  been  averaging  just  below $50/bbl  level  since  the  most  recent  rally  in  July, when  the  price  rose  to  $65/bbl.  The  recent weakness  in  crude  oil  prices  has  brought  the average so far in 2015 down to $56/bbl.

The  recent  lows  in  crude  oil  prices  reflect expectations of supply increases from Iran and the US.  In  addition,  the  demand  outlook  has weakened  with  slower  than  expected  global economic growth, especially in key economies like China.


In September,  US  passenger  yields  were  down 4%  year-to-date.  The  weakness  in  yields  likely reflects  downward  pressure  from  declines  in  fuel costs.

In US$-terms average global fares were  down 13%  in the first  8 months  of this  year, compared with  the  year  ago  period.  However, if we hold exchange rates constant to eliminate  the translation effect of the stronger US dollar, global fares  were  down  6%  over  the  same  period.  The US dollar’s appreciation is exaggerating the downward pressure on fares, but there  is  still some underlying downward pressure evident.

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