IATA's airline traffic results for June 2011 show a
slight softening in demand for both air travel and freight
Compared to June 2010, passenger demand was up 4.4% while
freight demand was 3% lower. The trend for passenger travel
remains upwards, but at a slower pace than the post recession
rebound which was at an annual rate close to 10%.
reflects slower economic growth and increased costs resulting from
higher jet fuel prices, and increased taxation (in some
Freight volumes have not grown since
July-August 2010. May 2010 was the post-recession re-stocking
peak, compared to which the June 2011 international freight market
was 6% smaller. While world trade is expanding at 7% a year, the
benefit is being realized more by modes of transport other than
“Compared to May both passenger and cargo
markets contracted by about 1%. For passenger traffic, this is a
speed-bump in a gradual post recession improvement. But air cargo
continues in the doldrums at 6% below the post-recession peak,”
said Tony Tyler, IATA’s Director General and CEO.
International Passenger Markets by Region
demand for international passenger services grew by 5.9% and
capacity expanded by 7.2%. While load factors were maintained at
an impressive 79.0%, this is 0.9 percentage points below the June
Latin American carriers experienced the
highest growth levels with a 14.3% increase over June 2010.
Disruptions following Chile’s Puyehue Volcano eruption contributed
to a drop from the 21.3% increase recorded in May. Load factors
for the region rose to 77.3% (from 73.8% in June 2010) which will
help the region’s carriers deal with higher fuel costs.
European carriers are showing the second most robust expansion of
demand with 8.9% growth compared to June 2010. The weak euro is
supporting a strong inbound travel trend and business travel
associated with growing exports. Load factors for the region stood
at 80.6%, the second highest among regions.
carriers recorded a 6.4% increase in demand against a capacity
increase of 8.4% for a load factor of 74.8%. For the second
consecutive month both demand and capacity increases by Middle
East carriers have fallen behind those of Europe and Latin America.
North American carriers saw May’s 4.5% demand
growth fall to 2.4%. With tight capacity discipline, airlines
there delivered a load factor of 85.3% - the highest among the
Asia Pacific carriers saw demand grow by 3.3%.
Demand growth was held at about half the global average due to
tightening economic policies and the effects of the earthquake and
tsunami in Japan. The weakness in Japan’s international market has knocked 0.5% percentage points off the region’s growth. Asia
Pacific carriers recorded a load factor of 76.9% which is 2.1
percentage points below the global average.
continue to experience the weakest demand with a 2.9% fall
compared to June 2010 levels. The continued political unrest in
North Africa is the primary driver of the poor performance which
is also reflected in load factors which stood at 64.7%, which is
3.9 percentage points below the previous year’s levels.
Demand in the Japanese
domestic market continues to suffer from the effects of March’s
tsunami and earthquake, recording a 24.6% fall compared to the
previous year’s performance. This is a slow improvement on the
-27.8% recorded for May.
Brazil led domestic growth with a
15.1% demand expansion over the previous year, propelled by strong
growth in household incomes. Brazil was followed by India at
14%. While China’s 5% growth is also impressive, it is a step
change from the 14.6% recorded in 2010 and the 10.4% recorded in
May. China, the world’s second largest domestic market, still has
enormous potential. As with China’s international markets, the
slowdown reflects a squeeze on consumer spending power by tighter
The US, which represents more than 50% of
domestic travel, posted 1.3% growth in June.
Freight (Domestic + International)
carriers, the biggest players in the air freight market with a
40.5% market share, also recorded the largest year-on-year decline
(-5.8%). This is mainly attributable to disrupted supply
chains for the electronics and auto industries in the wake of the Japanese tsunami and earthquake and slower economic growth in
China. The strength of the region however is shown in the maintenance of the highest load factors (58.6%) well ahead of the
45.7% industry average for the month.
posted a 1.3% decline and North American carriers recorded a
decline of 3.0% compared to June 2010 levels.
Carriers in the
Middle East, Latin America and Africa showed year-on-year growth
for June, recording demand increases of 3.7%, 2.8% and 0.3%
industry is living in several different realities. With high load
factors and an upward growth trend, the passenger business is doing better than cargo. But regional growth patterns are
shifting. The Middle East carriers have moderated to a single
digit expansion and tighter economic conditions have slowed
China’s growth. Meanwhile, Latin America is leading the industry
expansion followed by Europe which is growing strongly despite its
currency crisis. And North America is underperforming the industry
on growth but leading on load factors,” said Tony Tyler, IATA’s
Director General and CEO. “What is clear is that the rising jet fuel price is putting
pressure on the bottom line. The average price for the second
quarter was $133/barrel which is an increase of $10 over the first
quarter. With an expected profit margin of only 0.7%, the ability
of airlines to recoup this cost is critical to staying in the
black for the year. Slower economic growth makes these challenges
all the more difficult. It is certainly not the time to burden the
industry with increases in other costs, including taxation.”
IATA is forecasting an industry profit of $4
billion for 2011 which is a 78% fall from the $18 billion that the
airlines made in 2010. On anticipated revenues of $598 billion,
this translates to a net industry margin of 0.7%. Based on a
forecast average oil price of $110/barrel for 2011 and a jet fuel
price of $126.5/barrel, the industry fuel bill is expected to be
$176 billion which accounts for 30% of costs.
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