IATA: Passenger traffic strongest in Middle East

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Updated 02 May 2013
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IATA: Passenger traffic strongest in Middle East

Global air travel grew by 6 percent in March from a year earlier, led by emerging markets, according to the International Air Transport Association (IATA).
During the same month, capacity grew by just 3.5 percent, meaning that there were generally fewer empty seats.
Growth in passenger traffic was strongest in the Middle East, IATA said.
According to IATA, Middle East carriers experienced the strongest traffic growth for any region at 15.6 percent year-over-year, with a 14.2 percent rise in capacity that boosted load factor one percentage point to 79.7 percent. While a smaller share of international air travel (13.4 percent) they have carried about 20 percent of the increase in demand over the past six months.
“Strong demand for air travel is consistent with improving business conditions. Performance, however, has been uneven. Mature markets are seeing relatively little growth while emerging markets continue to show a robust expansion,” said IATA Chief Executive Tony Tyler.
“Although oil prices have softened in recent weeks, they remain high against historical averages. In view of this, airlines are responding with a very cautious approach to capacity management,” he said.
In 2013, the Easter holidays occurred in March as opposed to April last year, stoking demand for flights, IATA said.
But while the recovery in air travel seems intact with growth increasing every month of this year, growth has stalled in the air cargo market.
IATA said earlier that global air freight traffic — seen as a short-term leading indicator of economic growth — fell in March versus the previous year on lower demand from Asian Pacific carriers.
Asia-Pacific carriers’ traffic rose 5.4 percent in March compared to the same month last year. Strong growth in the Chinese market as well as an improvement in Asia trade since the 2012 fourth quarter have supported increased demand. Half of the growth in international traffic since October has been carried by Asia-Pacific carriers. Capacity rose 3.4 percent year to year and load factor climbed 1.5 percentage points to 79.0 percent. Compared to February, traffic rose 0.8 percent.
European carriers recorded 3.7 percent growth on international services compared to March 2012. However, the trend for international travel on European airlines has been largely flat since October 2012, reflecting persisting weakness in the Eurozone economy and recent downward revisions to growth expectations for 2013. Nearly flat capacity growth of 0.4 percent helped propel load factor 2.6 percentage points to 81.2 percent, second highest among regions.
North American airlines’ international traffic rose 2.4 percent year-on-year in March (after rising just 0.3 percent in February). This was the slowest rise among the regions, in part owing to a 0.9 percent reduction in capacity. Load factor rose 2.6 percentage points to 83 percent, the highest for any region. Although the underlying growth trend has been improving for several months, recent months have seen considerable volatility in the data and some indication of weakness. The ongoing cuts in US federal spending (sequestration) could eventually impact economic growth and ultimately consumer spending.
African airlines’ traffic climbed 8.2 percent in March, while capacity rose 5.7 percent, pushing load factor up to 67.8 percent, still the lowest for any region. Although traffic declined 1.1 percent compared to February, the region is seeing solid growth.
“Business confidence levels continue to foreshadow an economic upturn. It is important that governments avoid placing roadblocks to recovery. The flight delays and cancelations inflicted on air travelers to, from and within the US owing to sequestration-related budget cuts had the potential to inflict real damage to the economy if they had been permitted to continue,” said Tyler.


Saudi insurance stocks soar as female drivers take to the road

Saudi Majdoleen Mohammed Alateeq, a newly licensed Saudi driver, gets out of her car in Riyadh on Sunday. The insurance sector is just one segment of the economy set to benefit from the lifting of restrictions on women drivers in the Kingdom. AFP
Updated 25 June 2018
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Saudi insurance stocks soar as female drivers take to the road

LONDON: Saudi insurance stocks surged on Sunday, with investors expecting the sector to reap significant dividends following the lifting of the ban on female drivers.
Insurance stocks — one of the worst performing sectors on the Saudi bourse for the year to date — outperformed other classifications on Sunday, ending 2.4 percent higher, compared with a 1.8 percent rise for the Kingdom’s headline index.
Amana Insurance and AlRajhi Takaful were the best performers of the day, gaining 9.9 percent each. Tawuniya, the Kingdom’s largest insurer, ended Sunday 1.1 percent higher, with only one of the country’s 33 listed insurance providers closing lower for the day.
The lifting of restrictions on female drivers — which came into effect on Sunday after first being announced in September — is part of a series of wide-ranging reforms introduced as part of Saudi Arabia’s Vision 2030 economic transformation program, designed to diversify the economy away from a reliance on oil revenues.
The advent of women drivers is forecast to benefit the economy by significantly increase female participation in the workforce, and stimulating financial, insurance and retail sectors among others.
The insurance sector is set to draw particular benefit from the move, but may remain under pressure, according to rating agency S&P.
“We anticipate that efforts of the local authorities to tackle the large number of uninsured drivers, combined with the arrival of women drivers … and the introduction of additional benefits under the unified medical policy from July 1, will support further premium growth in the industry in the medium term,” said S&P in a research note in April.
“However, these factors may be offset by the large number of foreign workers that have already left or will be leaving the Kingdom in 2018.”
In spite of yesterday’s price surge, insurance stocks are 8.4 percent lower for the year to date. Tadawul as a whole is up 15.6 percent so far this year, making the bourse one of the world’s best performers for 2018.
Investor sentiment on Sunday was also boosted by investor optimism after index provider MSCI announced last week that it would upgrade Saudi stocks to its Emerging Markets Index from next year.
The widely anticipated upgrade — which puts Saudi equities on an index tracked by around $2 trillion worth of global assets — is expected to attract up to $40 billion of international funds, Tadawul CEO Khalid Al-Hussan told Arab News last week.
MSCI’s upgrade came after a similar move by fellow index provider FTSE Russell in February, which is also scheduled to come into effect from next year.
Banks were among the other bright performers on Tadawul on Sunday. Arab National Bank led gains, closing up 4.2 percent, while blue-chip names NCB and AlRajhi rose 1.6 percent and 2.3 percent respectively.
Some petrochemical companies also added value, Reuters reported, following a rise in oil prices after OPEC decided on only modest increases in crude production last week.
Outside Saudi Arabia, Gulf markets posted minor gains. In Dubai, where the index was flat, Air Arabia was unchanged. Shares in the airline have declined by more than 10 percent since early last week, when the company said it had hired experts to protect its business interests in private equity firm Abraaj, which has filed for provisional liquidation. The airline said its exposure was around $336 million.
Last week, the UAE’s securities regulator asked listed companies to declare their exposure to Abraaj.