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IATA Reports January 2012 Global Airline Traffic

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Global airline traffic results compiled by IATA for January 2012 show a 5.7% rise in passenger demand but an 8% decline in air freight compared to the same month in 2011.

 The occurrence of Chinese New Year in January (rather than in February as in 2011) exaggerated the increase in passenger demand and the fall in air freight. Stripping this out, the underlying trend was for stronger passenger growth, while stabilized weakness in cargo markets continues.

“The year started with some hopeful news on business confidence. It appears that freight markets have stabilized, albeit at weak levels. And this is having a positive impact on business-related travel. However, airlines face two big risks: rising oil prices and Europe’s sovereign debt crisis. Both are hanging over the industry’s fortunes like the sword of Damocles,” said IATA’s Director General and CEO Tony Tyler.

Total January passenger demand rose 5.7% compared to January 2011 a slight acceleration from the 5.6% year over year increase recorded for December 2011. With January passenger capacity up 4.2%, average load factor rose 1.1 percentage points to 76.6% compared to the same month a year ago.

Freight markets stood at 8% below January 2011 levels. The decline in air freight stabilized in the fourth quarter of 2011, at levels 4% below the 2008 pre-crisis peak. There was a 2.5% fall in global freight markets from December to January, but this is almost totally attributable to the impact of factory closures due to the Chinese New Year. Freight capacity contracted by 0.6% year over year, and freight load factor fell to 41% (from 44.3% in January 2011) as deliveries of new widebody passenger aircraft offset measures to reduce freight capacity.

International Passenger Markets

International air travel rose 5.5% in January year over year, while capacity climbed 4.2%, resulting in a load factor of 76.6%, up from 75.7% in January 2011.

Asia Pacific airlines saw their traffic rise 6% in January compared to 2011. Capacity climbed 6.4% and load factor dipped slightly to 77.5%. Year on year traffic growth would have been softer were it not for the Chinese New Year boost.

European carriers experienced a 5.3% gain in traffic versus January 2011. The persisting economic weakness of the region resulted in a considerable drop from the 9.5% growth recorded in December despite the attractiveness of the weak Euro to tourist traffic and export activity. The average load factor strengthened to 75.7% on a 2.7% rise in capacity year over year; however, the load factor is among the lowest of the regions.

North American airlines had a 0.3% dip in passenger traffic, but capacity dropped 0.9%, pushing load factor up fractionally to 77.6%. Next to African carriers, the passenger demand was the weakest performance.

Middle East airlines recorded double-digit traffic growth in January, posting a 14.5% increase. This was by far the largest rate of growth for any region and represents a return to the rates experienced in 2010. Capacity rose 10.6%. Load factor climbed 2.7 points to 78.5%, among the highest of the regions.

Latin American carriers continued to enjoy robust passenger demand. Traffic rose 7.9% in January compared to the same month last year, while capacity increased 7.4%. At 79.9%, the region’s carriers had the strongest load factor.

African airlines reported a 3.6% decline in demand and a 0.8% decline in capacity, with a load factor of 64.8%, the lowest load factor among the regions. Although sub-Saharan economies are showing strong economic growth, African airlines are finding it difficult to capitalize on the trend.

Domestic Passenger Markets

Domestic markets outperformed international markets in aggregate as strong demand in Brazil, China and India helped to push domestic traffic up 6.1% compared to January 2011.

• The impact of Chinese New Year-related traffic was evidenced in China’s domestic market, which surged 16.8% year over year on a 14.3% lift in capacity, pushing load factor to 80.8%, the highest recorded for domestic traffic. On a seasonally adjusted basis, traffic rose 3.2% compared to December. The Chinese market now accounts for more than 21% of the total global domestic market.

• US January domestic traffic was nearly flat at 0.2%, but capacity contracted 1.5%, pushing load factor to 78.1%.

• Japan’s traffic was 8.9% below previous year levels, slightly more than the 8.3% contraction in capacity. Year to year comparisons are affected by the impact of the March 2011 earthquake and tsunami as well as industry restructuring.

• Brazil’s airlines saw a 10.5% rise in demand while capacity climbed 14.8%. Load factor was 74.9%, down 2.9 points from January 2011.

• India traffic rose 8.8% year over year, while capacity expanded 12.8% and load factor was 74.9%. Demand rose 0.9% compared to December.

Air Freight (Domestic and International)

 The decline in air freight markets ended in the 2011 fourth quarter. The January contraction largely was owing to the Chinese New Year and resulted in international demand falling 8.1% while domestic markets dropped 7%.

 Asia Pacific and European airlines bore the brunt of the international decline, down 14% and 9.6% respectively compared to January 2011. In addition to the impact of the holiday, the peripheral economies in Europe have been in recession and attracting little inbound freight. Until recently this had been offset by strong outbound traffic flows from Northern European economies.

 Middle Eastern carriers enjoyed a 9.4% rise in demand, the healthiest performance among the regions. North American airlines’ demand dropped 4.0%. Latin American carriers’ traffic climbed 2.2% while African carriers saw a 3.7% decline compared to the year-go period.

Bottom Line

“Running an airline in today’s uncertain economic climate is a tough job. Some well-known names—Spanair and Malev—disappeared in January. At the same time, we know that demand for air travel will grow as the global economy recovers and requires even greater connectivity. The billions of dollars in commercial orders placed at the recent Singapore Airshow demonstrate that airlines are strategically investing to meet that demand with ever-more fuel efficient and environmentally-sustainable aircraft,” said Tyler.

“The aviation industry is a catalyst for economic growth. Governments should keep this in mind in their policy initiatives. Measures to boost competitiveness—not taxes or restrictions—are immediately needed, along with a long-term vision to support sustainable economic growth through much needed infrastructure investments. This includes the Single European Sky, the Federal Aviation Administration’s NextGen, Seamless Asian Skies and airport development. Of course, this must be accompanied with polices to improve environmental performance—the commercialization of sustainable biofuels and a global framework for economic measures to manage aviation’s emissions through the International Civil Aviation Organization included. Such a holistic policy approach will keep communities sustainably connected to global economic opportunities,” Tyler added.

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