According to IATA, international scheduled
traffic statistics for July 2010 show a continued strengthening of
demand for both passenger and cargo traffic. Compared to July
2009, international passenger demand was up 9.2% while
international scheduled freight traffic showed a 22.7%
These year-on-year comparisons for July were
less than the June growth data showing 11.6% and 26.6% increases
for passenger and cargo traffic, respectively. The apparent
slowdown was entirely due to the fact that by July 2009 traffic
was already starting to recover. After adjusting for seasonality,
the improvement in demand was faster month-to-month in July than
it was in June.
It is clear that the recovery has entered a
slower phase. During the second half of 2009, demand was
rebounding at an annualized rate of 12% for passenger and 28% for
cargo. In the year to July, the annualized growth rates had
dropped to 8% for passenger and 17% for air freight. However, this
is still considerably above the industry’s traditional 6% growth
“The recovery in demand has been faster than
anticipated. But, as we look towards the end of the year, the pace
of the recovery will likely slow. The jobless economic recovery is
keeping consumer confidence fragile, particularly in North America
and Europe. This is affecting leisure markets and cargo traffic.
Following the boost of cargo demand from inventory re-stocking,
further growth will be largely determined by consumer spending
which remains weak,” said Giovanni Bisignani, IATA’s Director
General and CEO.
Passenger Traffic in
July global passenger traffic
was 3% higher than the pre-crisis levels of early 2008.
Asia Pacific carriers outperformed the industry average with a
10.9% growth in July. This is consistent with the region’s 10.6%
growth measured year-to-date. A July capacity increase of less
than half the demand growth (5.1%) pushed load factors higher.
Leading the industry recovery, the region’s carriers are expected
to report a profit of US$2.2 billion. This will be the largest
gain in dollar terms in 2010 compared to 2009.
airlines, beleaguered by the region’s weak economy, saw little
growth when the recovery took off in the second half of 2009. These airlines are now benefiting from long-haul expansion in
2010. In July, passenger demand was up by 6.2% over the same month
in 2009. But the region’s slow start in the recovery process has
seen it deliver the weakest demand performance among all the
regions over the first seven months of the year (+3.6%).
American carriers recorded a 7.9% improvement in passenger demand
in July over the same month in the previous year. Over the first
seven months of the year, the region’s carriers recorded a 6.3%
increase, but kept capacity expansion to just 1.0%, raising load factors to 82.0% and producing strong gains in unit revenues that
will support the region’s return to profitability this year.
African airlines are now benefiting significantly from the
economic and travel upturn, outperforming the industry with 13.0%
growth in passenger demand in July, which is consistent with the
year-to-date improvement of 13.1%. Capacity is quickly coming back
into the market with a 10.4% increase in July, limiting
improvements in both load factors and financial performance.
Latin American carriers outperformed the global average with
passenger growth of 14.2% in July (10.9% for the first seven
months of the year). Faster capacity additions have seen load
factors drop, which will limit gains in financial performance.
Middle Eastern carriers continue to add the largest amount of
capacity (12.8% in July and 13.2% over the first seven months of
the year). The region’s carriers have managed to increase demand
at even higher levels (16.8% in July and 19.4% over the first
seven months of the year). Load factors and financial performance
will record improvements this year.
Cargo Traffic in July
July global cargo
demand was 4% higher than pre-crisis levels in early 2008.
slowdown in air freight markets is expected in the second half of
the year as the economic cycle moves into a new phase. Extraordinary freight growth rates in late 2009 and early 2010
were supported by businesses re-stocking their inventories. With
the re- stocking cycle completed, air freight demand will be driven
by consumer spending and business capital expenditure. Weak
consumer confidence in Europe and North America will be a negative
factor. But strengthening corporate profits are supporting an
increase in capital expenditure that could continue to drive
robust freight growth.
The two-speed recovery continues to see weak
growth by European carriers of 12.1% in July, less than half the
25.3% increase by Asia Pacific carriers or the 27.1% growth
recorded by North American carriers.
“Improving demand is an
important component of the recovery. But it must translate to the
bottom line. The anticipated 2010 profit of $2.5 billion is only a
0.5% return on revenues. Hence, the financial situation of the
industry remains fragile. We must go beyond recovery to secure
sustainable profitability at levels exceeding the 7-8% cost of
capital. For this, we need a change in the industry’s structure,” said Bisignani. “Costs are a critical element. This year
has been marked by strikes and threats of strikes at airlines, and
with airports and air navigation service providers. Avoiding
strikes at BAA and AENA, Spain’s provider of air navigation
services, were major accomplishments. We are all in this
together—including all our partners in the value chain and those
who work in this financially fragile industry. It is not the time for strikes. We must work together to secure our future by finding
solutions to reduce costs.”
noted the need for a regulatory structure that facilitates
consolidation across political borders. “The crisis has seen consolidation in Europe and the US. This month’s merger
announcement by LAN and TAM brings Latin America into the picture.
And trans-national brands are serving customers effectively in
many parts of the world. But we remain an industry of over a
thousand players with only very limited opportunities to
consolidate as a result of the antiquated bilateral system’s
restrictions on ownership. The business realities of the industry
are changing. It is critical that governments find a modern
regulatory structure that is free of outdated ownership
restrictions and able to facilitate opportunities for
consolidation globally—something that other industries take for
granted,” he said.
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