International scheduled traffic results for June
show passenger demand declining 7.2% compared to the same month
in the previous year while freight demand was down 16.5%. The
figures, compiled by IATA, show international passenger load factors stood at 75.3%, down from
77.6% recorded in June 2008.
The 7.2% drop in international
passenger demand was however a slight improvement on the 9.3% fall in May.
The capacity adjustment of -4.3% did not keep pace with the fall
in demand leaving average fares and yields under significant
pressure. As a result, June 2009 revenue on international markets fell
by a shocking 25-30%.
Cargo demand remained weak at 16.5%
below June 2008 levels. This is a moderate improvement, albeit
from extremely weak levels, over May, which was 17.4% below 2008
There has been some improvement in world trade and, after
adjusting for seasonal fluctuations, freight volumes rose 6% from
the low point recorded in December 2008.
However, the utilization
of air freight capacity on international routes remained very weak
(47.3%) in June due to unbalanced trade flows with Asia and some
market share loss to ocean transport.
passenger demand remains very weak,” said Giovanni Bisignani,
IATA’s Director General and CEO. “While it appears that there is
stabilization in some markets, this comes at a steep price.
Capacity cuts have not kept pace with demand falls. Even with
lower fares, the load factor remains 2.3% below last year’s
levels. Airlines are seeing international revenue falls of up to
30% at the start of the busy June-August period when airlines
traditionally make their money. The outlook remains bleak.”
Airline Passenger Demand
regional pattern of air travel was very mixed in June:
Asia Pacific carriers recorded a 14.5% fall in demand in June
compared with the same month a year ago, following a 14.3% drop in
May. Fears about Swine Flu have also contributed to
delaying any early revival in air transport. Initial estimates
suggest the impact of Swine Flu or Influenza A(H1N1) as it is also
known took up to 4 percentage
points off growth rates for the region’s airlines in June.
North American airlines reported a relative improvement in June,
with demand falling 6.7% in June (compared to the 10.9% fall in
May). The smaller decrease is likely due to discounting. Load
factors of 82.6% were the highest of any region, but revenue from
international markets was down about 29% in June, the same as the
European carriers saw traffic fall 7.1% in
June, not as deep as the May decline of 9.4%. Load factor for June
was 77.3% for the region.
Latin American airlines posted a
4.7% fall in passenger demand, significantly better than the 9.2%
drop in May. There are early indications that the region is
starting to recover from the Swine Flu crisis, which hit
in May. The Mexican carriers reported a 25% decline in demand, an
improvement from the 40% drop in May. There is still uncertainty
around the spread of Swine Flu and its affect on travel.
African carriers struggled in June with a 5.9% fall in traffic
on international routes. Since many African economies are growing
despite the global recession, this drop in demand represents
market share loss.
Middle Eastern carriers remained the bright
spot with strong 12.9% growth in demand with a 15.2% expansion of
capacity. The region’s airlines are growing market share with
particularly strong traffic growth on routes to Europe and Asia.
International Air Freight
In June, freight demand remained
relatively stable, but at a level 16.5% lower than the same month
last year, traffic remains weak.
June marked the 13th
consecutive month of contracting demand for international air
cargo. Despite reaching a bottom in December, improvement has been
slowed by high inventory levels and soft demand. At the current
pace, it will likely take several years before demand returns to
early 2008 levels.
Asia Pacific airlines reported a 15.8% drop
in June. While still extremely weak, this is an improvement
compared to the 18.1% fall in May. This reflects improved economic
conditions in a number of emerging Asian economies, such as China.
The economic recovery in
North America is being
held back as consumers choose to repay debt rather than increase
spending. European carriers saw the weakest demand for freight in
June at -20.3%. This was a softening in demand from the -19.2%
experienced in May. North American carriers reported a 18.6% fall
in June demand. This is relatively unchanged from the 18.8% fall
Middle Eastern carriers reported a -4.2% decline in
freight demand resulting in a 40.2% load factor.
carriers saw demand decline by 20.2% while Latin American carriers
saw demand fall by 14.2%. Freight load factors in these regions
were the lowest at 26.6% and 31.6% respectively.
“These are extremely challenging times
for airlines. There are no signs of an early economic
recovery. Other external risks are potentially great,
including rising oil prices and the impact of Influenza
A(H1N1) on demand. Cash flow is threatened by weak
demand, exaggerated by fare discounting. And, after
years of cost reduction, the scope for further cuts is
limited. Flexibility is critical in finding new sources
of capital and new markets. This crisis highlights the
need for governments to replace outdated restrictions on
ownership and market access with modern commercial
freedoms. Quick action is needed,” Bisignani added.
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