Preliminary traffic figures for July 2026 released by the Association of Asia Pacific Airlines (AAPA) show continued pressure on international passenger markets, with higher fares weighing on demand. The report indicates that regional travel was also affected by the further rationalisation of network operations, a response to persistently raised jet fuel prices and airspace restrictions linked to the ongoing conflict in the Middle East.
Asia Pacific airlines carried a combined 32.4 million international passengers in July, marking a 1.3% decline from the previous year. Despite the drop in total passengers, demand, as measured in revenue passenger kilometres, actually increased by 1.1%. This growth was driven by encouraging performance on longer-haul routes. Available seat capacity edged 0.5% higher, which contributed to a 0.5 percentage point increase in the average international passenger load factor to 82.4%.
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Air cargo markets posted another month of growth, though at a more moderate pace. International air cargo demand, measured in freight tonne kilometres (FTK), grew by 1.1% year-on-year. Offered freight capacity expanded by 1.8%, leading to a 0.4 percentage point decline in the average international freight load factor to 61.3%. This shift reflects a structural change in the logistics market where capacity is outpacing the immediate need for transport, a trend that often signals shifting trade patterns rather than a simple lack of demand.
Cost pressures and currency challenges
AAPA Director General Wong Hong highlighted the challenges facing the sector in a statement released with the data. He noted that Asian airlines carried a combined 225.7 million international passengers in the first seven months of the year, a 2.5% increase compared to the same period last year. Longer-haul markets were a key driver of this growth, supporting the overall rise in passenger demand.
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However, July saw jet fuel prices averaging USD143 per barrel, a 52% jump compared to the same month in 2025. Wong said the spike was driven by the Middle East conflict, and higher air fares continued to weigh on demand, particularly on shorter-haul routes. The impact was more pronounced in the price-sensitive leisure sector, which has proven reluctant to absorb the increased costs. The cargo business segment continued to benefit from growth in export activity from major regional manufacturing hubs. Overall, international air cargo demand rose by a robust 6.2% year-on-year during the first seven months of the year, although the pace of growth has become more moderate in recent months.
Looking ahead, Wong said underlying demand conditions remain supportive, underpinned by continued growth in regional economies, though momentum has moderated. Persistently high fuel prices, together with the weakening of several Asian currencies against the US dollar, continue to add to airline cost pressures. Rising inflation also weighs on demand. Against this backdrop, carriers continue to align capacity with demand while retaining the flexibility to respond to changing market conditions.
