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Global Airline Traffic continues to Slow

Search ASIA Travel Tips .com Latest Travel News Send to Friend Tuesday, 6 May 2008

IATA's global scheduled international traffic data for March 2008 shows that when compared to March 2007, airline passenger demand increased 5.8% with load factors at 77.7%. Freight traffic grew 3.2%.

March 2008 passenger growth is positively skewed by the Easter holiday period which was in April of the previous year. Adjusting for this distortion, real traffic growth in March was 4%. The slowdown in the demand growth continues the sharp downward trend which began in December 2007 as the impact of the US credit crunch began to be felt in the airline industry.

International passenger load factors were equally skewed. When adjusted to take into account artificially high utilisation over the Easter period, the March load factor was 76.1%. While still high, this is 1.7 percentage points lower than the 77.8% recorded for the same month in 2007. This fall indicated that the slowing of demand occurred faster than airlines could cut capacity.

International freight growth of 3.2% remains sluggish and well below the 4.3% growth recorded in 2007.

Traffic only tells a part of the story. Astronomical oil prices are hitting hard. And the buffer of an expanding economy has disappeared. The fortunes of the industry have taken a major turn for the worse, said Giovanni Bisignani, IATAs Director General and CEO.

Regional differences in passenger traffic growth are significant:

As North American carriers shift traffic from low-yielding domestic markets, their international traffic grew by 6.3% in March. The impact of high valued Euro saw U.S. carriers capitalise on the North Atlantic with a 10% growth in traffic while European carriers operations in the same area contracted by 2%. Overall European carrier passenger traffic grew by 3.7%.

The slowdown in Asia Pacific carrier traffic to 4.3% is significant in that the regions booming economies were expected to immunise them from the US slowdown.

African carrier traffic contracted 4.3% as a result of a failed expansion push into Middle East and Asia markets in the first part of the previous year.

Middle East carriers saw a double-digit increase of 15.4% reflecting the expanding economies in the region. But even this is a significant downward step from the 20.4% recorded in 2007.

Latin American carrier traffic continues to recover from the restructuring in 2007, boosted by strong demand for commodities produced in the region. The 19.7% growth experienced is well above the 0.5% recorded for the same time period last year.

In the face of such dramatic shifts in the global economy, consolidation is critical. The proposed consolidation in the U.S. is good news. But it makes no sense that consolidation is limited to domestic partners. This is a global industry that needs to be run like a global business. The U.S.-EU Open Sky Agreement second stage talks that open in May must deliver a modern approach to ownership rules, Bisignani said.

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