Robust air passenger growth signals impending strain on global infrastructure capacity

The market for air travel remains hot as is evident from the load factor, which reached record high of 86.2% in August.

All regions showed growth for international passenger markets in August compared to the same period last year.

Ticket sales in May-July for travel in August-September showed a 6.6% year-on-year increase, which bodes well for further strong growth this year, according to IATA, the global trade body of airlines.

Total demand, measured in revenue passenger kilometres (RPK), was up 8.6% in August compared to the same month in 2023.

Total capacity, measured in available seat kilometres (ASK), was up 6.5% year-on-year. The August load factor was 86.2% (+1.6ppt compared to August 2023), a new record high.

International demand rose 10.6% compared to August 2023. Capacity was up 10.1% year-on-year and the load factor rose to 85.7% (+0.4ppt compared to August 2023).

Domestic demand rose 5.6% compared to August 2023. Capacity was up 1.2% year-on-year and the load factor was 86.9% (+3.6ppt compared to August 2023).

The record load factor (the percentage of available seats that are filled) is definitely a positive news and good for airlines around the world.

However, experts warn that the continued strong demand growth signals that the industry could be fast approaching an infrastructure capacity crunch that would restrict connectivity and choice for passengers and businesses.

When airlines experience record-high passenger load factors several challenges arise despite the obvious financial benefits.

Airport infrastructure, including terminals, runways, and gates, become congested when airlines operate at high load factors. This invariably causes bottlenecks during peak hours and reduce operational efficiency.

More passengers mean more baggage, which puts a strain on the airport’s baggage handling system, potentially leading to delays and lost luggage incidents.

Increased load factors have seen resulting in congested airports, both on the ground (check-in, security) and in the air (takeoff and landing slots), increasing the likelihood of delays.

More passengers mean longer times for boarding, deplaning, and baggage handling, potentially delaying the turnaround time for flights.

More passengers and full flights may lead to higher incidents of customer service complaints related to overbooking, delays, or dissatisfaction with the overall experience.

Airlines frequently overbook flights, assuming some passengers won’t show up. With record-high load factors, there is a higher risk of overbooking and "bumping" passengers, which then leads to adverse publicity, compensation costs, and regulatory fines.

Operating close to maximum capacity also raises issues with adhering to safety regulations and emergency procedures, as airlines and airports must ensure that services remain safe despite the high volume of passengers.

IATA’s Director General Willie Walsh noted: “The market for air travel is hot and airlines are doing a great job at meeting the growing demand for travel. Efficiency gains have driven load factors to record highs while the 6.5% capacity increase demonstrates resilience in the face of persistent supply chain issues and infrastructure deficiencies.

“Looking ahead, the continued strong demand growth signals that we could be fast approaching an infrastructure capacity crunch that would restrict connectivity and choice for passengers and businesses. If governments want to maximise the benefits of aviation, they must take bold decisions to ensure sufficient infrastructure capacity.”

In the interim, both airports and air navigation service providers need to do more with the resources they currently have, Walsh suggested.

“In particular, the variance in declared capacity of airports with broadly the same infrastructure needs to be resolved, with airports emulating the best performers. The industry cannot afford to under-utilise the airport infrastructure that we have,” said Walsh.

Undoubtedly, airlines around the world must balance these challenges with maximising revenue during high load periods to maintain operational efficiency and customer satisfaction.