Continued Traffic Improvement

The improvement trends for both passenger and freight are being exaggerated by the sharp fall in demand experienced during the second half of 2008. The following alternative measurements provide perspective: Passenger demand is 6.4% better than the low point reached in the first quarter of 2009, but still 6% below the peak levels seen in early 2008. Comparing to October (and adjusting for seasonality), passenger demand in November actually fell by 0.7%, primarily due to continued weakness in North America and Europe. Freight demand is 20% better than the low point in December 2008, but still 10% below the peak levels seen in early 2008. Comparing to October (and adjusting for seasonality), freight demand grew by 4.7%, largely on the strength of markets connected to Asia Pacific. Demand continues to improve, but we still have a lot of ground still to recover. We cannot anticipate any significant improvement in yields in the coming months. So, conserving cash, controlling costs and carefully matching capacity to demand remain at the keys to survival, said Giovanni Bisignani, IATAs Director General and CEO.

Improvements in passenger demand contain significant variances by region. In November, demand growth was recorded by carriers from Asia-Pacific (+5.1%), Latin America (+8.2%) and the Middle East (+16.5%). Asian traffic growth is driven most directly by economic recovery (with the exception of Japan). Asian economic growth is fuelling strong demand for commodities in both Latin America and Africa. While Latin American carriers are benefitting with business growth, a 2.1% fall in African traffic indicates a loss in market share. Middle East growth of 16.5% can also be related to the strength of Asia and the ability of Middle East carriers to facilitate connection traffic to the region through Middle Eastern hubs. European and North American carriers both experienced a 3.0% fall in November traffic. Unemployment concerns continue to negatively impact consumer confidence in both markets. Compared to last November, European carriers have cut capacity by 3.9% and North American carriers by 6.7%. While this has boosted load factors, capacity adjustments may also be weighing on growth rates.

The bulk of the air freight markets connect Asia. The 14.5% growth in freight demand for Asia-Pacifics carriers is linked to the success of stimulus packages in driving industrial output and broader economic recovery within the region. Carriers in other regions also saw strong growth in freight as follows: Africa (+8.1%), Latin America (+17.5%), Middle East (+21.4%) and North America (+13.6%). European carriers were the only group to post a drop in traffic, recording a 5.6% fall in demand. This reflects the lingering economic malaise in the region.