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IATA Reports July 2009 Airline Traffic

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International scheduled airline traffic results for July 2009 show passenger demand declining 2.9% compared to the same month in 2008, while freight demand was down 11.3%. International passenger load factors stood at 80.3%.

The July 2009 passenger demand fall of 2.9% was a relative improvement over the 7.2% drop in June 2009 and the 6.8% decline recorded over the first seven months of the year.

 July capacity was more in line with reduced demand than in previous months and load factors are similar to those recorded in July 2008. These positive developments, however, have come at the expense of yields which continue to fall sharply.

The 11.3% decline in cargo demand for July was also a relative improvement over the -16.5% recorded in June and the -19.3% average for the first seven months of the year. Despite this improvement, the July freight load factor of 47.6% was lower than the 49% recorded in July 2008.

Demand may look better, but the bottom line has not improved. We have seen little change to the unprecedented fall in yields and revenues. The months ahead are marked by many uncertainties, including the price of oil. The road to recovery will be both slow and volatile. In the meantime, the industry remains in intensive care, said Giovanni Bisignani, IATAs Director General and CEO.

All regions saw improved demand performance compared to June, but significant differences by region should be noted:

Asia Pacific carriers are experiencing the extremes of this recession. The 7.6% fall in passenger demand compared to July 2008, was the largest decline of any region. At the same time, compared to the -14.5% recorded in June, the relative improvement to -7.6% was also the biggest among all regions. Economic growth returned during the second quarter in a number of Asian economies, to a much larger extent than elsewhere. This was likely the driver behind Julys better performance. The impact on passenger confidence from Swine Flu (H1N1) was also somewhat diminished as media coverage of the disease decreased.

 European and North American carriers saw declines of 3.1% and 3.2% respectively. Passengers have been trading down to cheaper seats in the face of recession pressures. Airlines have also been leaving less expensive fares open for sale much longer (closer to departures dates) in the face of excess capacity and intensifying competition. The July improvement in travel demand was more the result of deep discounting than stronger incomes or greater economic confidence.

 Latin American carriers saw demand decline by 3.5%. This was the only region to see a greater decline in June than the seven month average which is -3%.

African carriers saw a fall of 5.5% compared to the seven month average of -8.6%.

The Middle East was the only region to grow in July. The 13.2% growth in July was slightly better than the 12.9% recorded in June. The growth was fueled by increased capacity and greater market share in traffic between Europe and Asia.

International Air Freight

Freight demand on international markets was 11.3% lower in July than a year earlier, but was a considerably better result than the -16.5% recorded in June. All regions, except Africa, saw improvement in demand compared to June. The Middle East was the only region to grow.

Falls by Asia Pacific carriers, European carriers and North American carriers were 9.5%, 16.2% and 14.6% respectively.

 African carriers posted the worst performance at -25.9%. This was the only region to see a deterioration in freight demand compared to June when the regions carriers posted a 20.2% decline compared to the same month in the previous year.

 Middle Eastern carriers were the only region to grow, posting a 1% growth in demand compared to July 2008.

Latin American carriers posted a 1.2% fall in demand compared to July 2008.

The freight numbers tell an interesting story. The sector is being boosted as companies re-stock depleted inventories. Once inventories are at desired levels in relation to sales, improvements in demand will level off until business and consumer confidence returns. Given the large amount of debt in all sectors of the economy, instant relief is not in the forecast, said Bisignani.

Airlines need to make their money in the June-August peak travel season. Planes are full. Load factors are high. But revenues are way down. Conserving cash, effectively managing capacity and cutting costs will be the long-term theme for every business in the air transport value chain, Bisignani added.

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