As global carriers are reeling under the fallouts of recession with sharp decline in air traffic and revenues, Middle Eastern carriers were the only ones to show growth in March, says International Air Transport Association (IATA). During March the Middle eastern carriers reported a growth of 4.7 per cent over the same period in 2008, according to data released by IATA. This is an improvement from the 0.4 per cent growth in February this year, and represented an expansion of market share. However, this was out of balance with the 13.1 per cent increase in capacity, says IATA. The global scenario continues to be bleak as the passenger demand last month fell to 11.1 per cent below the March 2008 levels. Airlines cut international passenger capacity by 4.4 per cent resulting in an average load factor of 72.1 per cent. This is 5.4 percentage points below the average load factor recorded in March 2008. Freight demand was relatively stable at -21.4 per cent compared to March 2008. “The global economic crisis continues to reduce demand for international air travel,” said Giovanni Bisignani, IATA’s Director General and CEO. IATA estimates that international revenues in March will be impacted with a decline of up to 20 per cent. “Airlines cannot adjust capacity to match demand. Load factors have dipped sharply from last year. All of this is hitting revenues hard,” said Bisignani. “The only glimmer of hope is that cargo demand has stabilised this month although at the shockingly low level of -21.4 per cent,” said Bisignani. For the fourth consecutive month international cargo demand is hovering in the -21 per cent to -24 per cent region as a result of the sharp drop in world trade. “It’s not the end of the recession, but we may have found the floor,” said Bisignani. Impact of swine influenza Rising concerns over Swine Influenza could have a significant impact on traffic. “Safety, as always, is our number one priority. IATA is working in close cooperation with the World Health Organization to ensure an efficient response of the air transport industry to the challenges that Swine Influenza will present,” said Bisignani. “It is still too early to judge what the impact of Swine Flu will have on the bottom line. But it is sure that anything that shakes the confidence of passengers has a negative impact on the business. And the timing could not be worse given all of the other economic problems airlines are facing.” Aside from Swine Influenza, Bisignani noted that airlines face many challenges. “Like the rest of the economy, recovery in the air transport sector rests on a rise in consumer confidence and consumer spending. Shedding debt will be a major headwind. US households, for example, are leveraged at 130 per cent of annual income. Even bringing this down by 5 per cent erases US$500 billion in consumer spending. The challenge for governments is to turn stimulus funds into spending that fuels trade,” said Bisignani. Passenger demand
Among the major regions, carriers in Asia Pacific continued to lead the decline with a 14.5 per cent fall in passenger demand, outstripping a 9.3 per cent downward adjustment in capacity. The region is particularly impacted by the fall-off in long-haul travel, which is contracting faster than short-haul.
North American carriers saw a decline in international passenger demand of 13.4 per cent as travel was further discouraged by US unemployment reaching 8.5 per cent in March and consumer confidence remaining weak.
European carriers saw their international demand fall by 11.6 per cent where confidence has been dented by unemployment in key markets such as Germany and Spain increased to 8.6 per cent and 17.4 per cent respectively.
African carriers showed the weakest performance in March with a 15.6 per cent fall in demand. But they did the best job at matching capacity to demand with an aggressive cut of 15.1 per cent. While cross border travel within Africa grew during February, African carriers continued to lose market share.
Latin American carriers increased capacity by 2.2 per cent as demand fell by 5.9 per cent. Travel to and from Central America and from Latin America to North America was particularly weak.
Middle Eastern carriers were the only ones to experience growth in March (4.7 per cent). This is an improvement from the 0.4 per cent growth in February, and represented an expansion of market share. But this was out of balance with the 13.1 per cent increase in capacity.
Cargo demand
Air cargo demand has moved sideways in the -21 per cent to -24 per cent range since its plunge from -7.9 per cent to -23.2 per cent between October last year and January 2009.
The severity of air freight slump is at least partly driven by manufacturers seeking to correct large inventory overhangs that emerged in late 2008. The stabilisation of the inventory to sales ratio has in turn stabilised air freight demand. Recovery, however, depends on purchasing that can deplete the inventory overhang. Inventory levels remain high and final demand is weak.
Among the major regions, carriers in Asia Pacific continued to lead the decline with a 14.5 per cent fall in passenger demand, outstripping a 9.3 per cent downward adjustment in capacity. The region is particularly impacted by the fall-off in long-haul travel, which is contracting faster than short-haul.
North American carriers saw a decline in international passenger demand of 13.4 per cent as travel was further discouraged by US unemployment reaching 8.5 per cent in March and consumer confidence remaining weak.
European carriers saw their international demand fall by 11.6 per cent where confidence has been dented by unemployment in key markets such as Germany and Spain increased to 8.6 per cent and 17.4 per cent respectively.
African carriers showed the weakest performance in March with a 15.6 per cent fall in demand. But they did the best job at matching capacity to demand with an aggressive cut of 15.1 per cent. While cross border travel within Africa grew during February, African carriers continued to lose market share.
Latin American carriers increased capacity by 2.2 per cent as demand fell by 5.9 per cent. Travel to and from Central America and from Latin America to North America was particularly weak.
Middle Eastern carriers were the only ones to experience growth in March (4.7 per cent). This is an improvement from the 0.4 per cent growth in February, and represented an expansion of market share. But this was out of balance with the 13.1 per cent increase in capacity.
Cargo demand
Air cargo demand has moved sideways in the -21 per cent to -24 per cent range since its plunge from -7.9 per cent to -23.2 per cent between October last year and January 2009.
The severity of air freight slump is at least partly driven by manufacturers seeking to correct large inventory overhangs that emerged in late 2008. The stabilisation of the inventory to sales ratio has in turn stabilised air freight demand. Recovery, however, depends on purchasing that can deplete the inventory overhang. Inventory levels remain high and final demand is weak.
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