The global airline industry landed a strong rise in passenger numbers in June, according to figures released by the International Air Transport Association (Iata) on Wednesday.
Total demand, which is measured as revenue passenger kilometres (RPK), was up 9.1 per cent in the month, compared with June last year.
Total capacity, measured in available seat kilometres (ASK), was up 8.5 per cent compared to June 2023 and the load factor was at 85 per cent, which was 0.5 per cent higher than last June. The load factor is basically the percentage of seats that are taken up by passengers on a flight.
Airlines in the Middle East saw a 9.6 per cent increase in demand, with a load factor of 79.7 per cent, almost exactly where it was last June.
Demand for international travel in general, as measured by RPK, was 12.3 per cent higher than in June last year, as passengers looked to go beyond their national borders for holidays at the start of the busy northern hemisphere summer season.
“Operating with such high load factors is both good and challenging,” said Willie Walsh, Iata’s director general.
“It makes it even more important for all the stakeholders to operate with equal levels of efficiency to minimise delays and get travellers to their destinations on schedule.”
Meanwhile, demand within the large domestic markets also held up well, except in Australia and Japan, where the RPK readings were 1 per cent and 0.2 per cent lower than last year respectively.
Nonetheless, demand in the US, which accounts for 15 per cent of the domestic total, was 5.1 per cent higher and in China demand grew by 5.5 per cent in June this year compared to last year.
Mr Walsh also pointed to the Olympic Games in Paris and the “pride” that the airline industry has “by bringing many of the athletes, fans, and officials together”.
“It is a great reminder of how aviation transforms our very big world into a global community,” he said.
“We wish France every success as the host of the games and cheer all the athletes who will demonstrate the best of human endeavour over the next weeks.”
Cargo surges
Alongside the passenger numbers, Iata also released figures for cargo, which showed a 14.1 per cent increase in total demand in June, the seventh month in a row that cargo demand has shown double-digit growth.
Middle Eastern carriers saw year-on-year demand for cargo in June grow by 13.8 per cent, while Asia-Pacific airlines witnessed a 17 per cent rise in demand.
Growth in demand for air cargo was weakest in the North American market, at 9.5 per cent, while it was at 16.1 per cent for European carriers.
Airlines have benefitted from the problems in the shipping industry related to the tensions in the Red Sea, as well as the huge increase in products in international transit as a result of the continuing expansion of e-commerce, Mr Walsh said.
“Meanwhile, the sector has remained largely impervious to ongoing political and economic challenges, and the US customs crackdown on e-commerce deliveries from China.
“Air cargo looks to be on solid ground to continue its strong performance into the second half of 2024,” he added.
Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
• Steve Cronin, founder of DeadSimpleSaving.com
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
• Zach Holz, who blogs about financial independence at The Happiest Teacher
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
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UAE currency: the story behind the money in your pockets
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Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
