Airline Passenger and Freight Demand Hits 16-Month High

The International Air Transport Association (IATA) has released traffic results for August 2007. Year-on-year international passenger demand increased 8.6% for the month of August, the fastest growth rate for 16 months. The acceleration in growth in August partly reflects the comparison with lower levels in August 2006, when demand was affected by security scares on the North Atlantic. It also shows an underlying improvement in travel into the third quarter of 2007, as airlines in Asia Pacific, in particular, benefit from traffic generated by robust economic growth in the region.

The average passenger load factor was 80.3% in August, down slightly from July’s record levels but 0.9 percentage points higher than August 2006. This is the first time average load factors have been higher than 80% in a month other than July. Record high load factors improve environmental performance by reducing emissions per passenger.

IATA recently revised its forecast for 2007 upward from an industry profit of US$5.1 billion to US$5.6 billion.

International air freight demand grew 6% in August, its strongest rate of growth for 16 months. Growth for the year-to-date is 3.9%. The recent improvement in freight demand growth indicates airlines may be winning back market share from other transport modes with competitive pricing and operations.

“While the credit crunch clearly shook both business and consumer confidence in August, demand for air travel remained solid with record high load factors for August. This, combined with strong revenues over the first half of the year, is behind our improved industry profitability forecast of US$5.6 billion for 2007. None-the-less, the industry’s financial situation remains fragile and the potential for weakening demand must continue to be met with improved efficiency across the value chain,” said Giovanni Bisignani, IATA’s Director General and CEO.

“The trend of increasing load factors is a concrete example of how aviation’s business and environmental goals are aligned with efficiency as a common denominator. As governments continue to squabble over emissions trading in the aftermath of the triennial Assembly of the International Civil Aviation Organization, the industry is getting on with the business of meeting consumer demand with ever-improving environmental performance,” Bisignani added.

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