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IATA reports December and Full-Year 2008 Traffic Figures

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 In the month of December 2008 IATA’s global international cargo traffic plummeted by 22.6% compared to December 2007. The same comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%.

For the full-year 2008, international cargo traffic was down 4%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%.

“The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9%,” said Giovanni Bisignani, IATA’s Director General and CEO.

 Bolstered by year-end advance-booked leisure travel, the 4.6% decline in December passenger demand was less dramatic than the fall in cargo. A 1.5% cutback in supply could not keep pace with falling demand, resulting in a 2.4% decline in the December load factor to 73.8%.

 “Airlines are struggling to match capacity with fast-falling demand. Until this comes into balance, even the sharp fall in fuel prices cannot save the industry from drowning in red ink,” said Bisignani.

“Yields are also under attack with a sharp drop in November premium traffic,” said Bisignani.

For November, IATA reported an 11.5% drop in the number of premium tickets issued globally.

Passenger Traffic

Full-year traffic results show a 1.6% increase in demand which is dramatically down from the 7.4% recorded in 2007. Capacity grew by 3.5% resulting in a full-year average load factor of 75.9% (down from the 77.3% recorded for 2007).

Rregional summary for December:

Asia Pacific carriers saw the sharpest decline in December international traffic at 9.7%. They also registered the sharpest reduction in capacity, but at 5.6%, this is lagging behind the drop in demand. Load factors sank to 72.6%. The economic turmoil in the region is widespread. December export volumes fell 20% for Singapore and 35% for Japan. Korean GDP showed a 5.5% contraction. While China’s economy continues to grow, recently released GDP figures show that it is at a much lower pace. As a result, traffic in the region continues to be the hardest hit.

European carriers saw demand for international travel fall by 2.7% while capacity declined by 1.5%. Load factors stood at the global average of 73.8%. With business confidence indicators pointing to a 10% decline in industrial production and a 20% fall in trade, there is little reason for optimism.

North American airlines saw December demand drop by 4.3%, far outstripping the 0.7% cut in international capacity. While North American carriers had made early cuts in domestic capacity of about 10%, this is the first month registering a cut in international operations. Nonetheless, the region recorded the highest load factor at 78.1%.

African carriers continued to see their traffic fall, despite more robust economies and travel to the continent than other regions. International passenger traffic declined 4.6% in December. The 2.1% reduction in capacity left load factors at 68.5%, the lowest among the regions.

Latin American airlines recorded a 1.1% increase in December demand and a 3.2% increase in capacity. With North American commodities demand and trade falling so sharply, the months ahead are likely to be more difficult for airlines in this region.

Carriers in the Middle East showed a 3.9% increase in demand in December, far below the 10% capacity increase. The region’s carriers ended five years of double-digit growth with full-year demand growing by 7.0% (compared to 18.1% recorded for 2007). Growth will continue to slow in 2009 as oil revenues and long-haul hub connection traffic are now both in decline.

Freight Traffic

Full year international air freight traffic contracted 4% for the year compared to 4.3% growth in 2007.
December saw an unprecedented 22.6% decline in air freight volumes, compared with the previous year.

All regions showed major declines. The collapse in the airline industry’s freight business is a reflection of 20-30% declines in export and import volumes being reported across Asia, North America and Europe as the global recession plumbs new depths in December.

Asia Pacific carriers, accounting for 45% of international cargo, led the December decline with a 26.0% contraction compared to the previous year. Latin American carriers saw cargo drop 23.7%; North American carriers 22.2% and European carriers 21.2%. Single-digit declines were recorded by Middle Eastern carriers (-9.2%) and African carriers (-8%).

“2009 is shaping up to be one of the toughest years ever for international aviation. The 22.6% drop in international cargo traffic in December puts us in un-charted territory and the bottom is nowhere in sight. Keep your seatbelts fastened and prepare for a bumpy ride and a hard landing,” said Bisignani.

Airlines registered a US$5 billion loss in 2008. For 2009 IATA is forecasting a further loss of US$2.5 billion based on a fuel price of US$60 per barrel, a decline of 3% in passenger volumes, a drop of 5% in cargo traffic and yield deterioration of 3%. Industry revenues are expected to contract by US$35 billion (from US$536 billion in 2008 to US$501 billion in 2009).

In the face of this economic crisis, IATA is calling for major structural changes to the industry. “We don’t want bail-outs. But we need to change the ownership rules. Almost every other business has the freedom to access to global capital and the ability to merge across borders where it makes sense. To manage in this crisis, airlines need the same management tools,” said Bisignani.

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