The minor 0.6% year-on-year growth posted for air cargo is less significant than the 0.6% fall in air freight volumes between August and September which is more indicative of the trend. This is the second notable month-on-month fall in air freight growth in as many months. This has eroded the stability in volumes achieved earlier in 2012. Capacity was trimmed 0.6% compared to year-ago levels. This strengthened the freight load factor slightly to 45.6% from 45.1% a year ago.
A two-speed recovery is emerging into a multi-speed reality. Carriers in China, Latin America and the Middle East are growing strongly. Europes airlines are experiencing profitless growth in a strategy to manage high fixed costs and taxes. In Africa the challenge is to turn growth opportunities into profits. But for North American airlines the focus is on tightly managing capacity in order to optimize profits in a slow to no-growth environment. Asia-Pacific carriers outside of China are a mixed bag. Robust growth in China is being tempered by faltering markets in Japan and India, said Tony Tyler, IATAs Director General and CEO.
Putting regional diversity aside, the fact that airlines are making any money at all with weak markets and high fuel prices is a tribute to their strong business performance, as evidenced by maintaining global load factors close to 80% since the start of 2012. Even with that, airlines are expected to eke out a global net profit margin of only 0.6%. Its a tough year, said Tyler. September 2012 vs.
YTD 2012 vs. YTD 2011
International Passenger Markets
September international passenger demand rose 4.9% compared to the year-ago period, with all regions reporting traffic growth. Only Asia-Pacific carriers experienced a decline compared to August. Capacity rose 3.1% for the month, pushing the load factor up 1.3% points to 80.9% compared to a year ago.
- European airlines experienced 5.4% growth on international services compared to September 2011, the strongest performance among the major regions despite recession conditions in Europe. With capacity up 3.5%, the load factor reached 83.9%, up 1.5% points on September 2011, and the second highest among the regions.
- Asia-Pacific was one of the weakest regions, as demand rose just 1.7% year-on-year. Compared to August, the region recorded a 0.3% declinethe only region to do so. Tight capacity management, however, meant that the load factor rose 1% point versus last year to 77.2%.
- North American airlines international traffic climbed 2.1% for the month, while capacity declined 0.2%, with the load factor reaching 84.6%, the highest for any region and a 2% point rise over September 2011.
- Middle East carriers experienced by far the strongest traffic growth, with demand up 13.3% year-on-year. This was down compared to the 17% growth recorded in August but the growth comparison for August was inflated by seasonal impacts, with Ramadan dampening traffic growth during August 2011. September capacity rose 11.3% and the load factor strengthened to 78.7%.
- Latin American airlines posted growth of 7.5%, second highest among the regions. Capacity climbed 6.2%also the second highestand the load factor rose 0.9% points to 78.2%. Compared to August, traffic rose 2.7%, the strongest month-on-month performance for any region.
- African airlines traffic climbed 4.7% year-on-year, on a 3% rise in capacity. The load factor was 71.6%, the lowest of any region but a 1.2% point rise over last year.
Domestic Passenger Markets
Domestic results were mixed. Demand rose 2.6% compared to September 2011, which was a slowdown from the 5% year-on-year increase recorded in August. But September traffic rose 0.5% compared to August. Results varied strongly by country, with China and Brazil making major gains that partly were offset by weakness in India, Japan and the US.
- Chinas domestic travel resurgence continued with an 11.4% rise in demand versus a year ago. This strong growth is in line with recent data on industrial production and consumer spending and incomes, all of which show improvement. With capacity up 12.1%, however, the load factor slipped 0.5% points to 82.1%.
- Brazil also experienced strong demand growth, with traffic up 7.1% on a 1.2% decline in capacity. The load factor soared 5.7% points to 74%. After several months of weak month-to-month traffic performance, September traffic rose 1.7% compared to August 2012.
- Japans domestic market declined 0.3% in September year-on-year and the countrys domestic market was still 10% smaller than pre-earthquake levels. The export-driven economy continues to suffer from weak demand for its products owing to the global slowdown, leading to decreased domestic demand for air travel. Capacity rose 0.8% and the load factor softened to 67.4% from 68.2%.
- US traffic slipped 1.5% in September while capacity rose by 0.3%. The load factor dipped to 80.5% from 81.9% last year, but still the highest among domestic markets.
- Indian domestic traffic plummeted 9.9% compared to a year ago, the worst performance for any market, reflecting the slowing economy and capacity reductions that have suppressed domestic travel. September capacity fell 5.9%, dropping the load factor 2.9% points to 64.9%, the lowest of any market.
Air Freight (Domestic and International)
Air freight demand rose 0.6% compared to September 2011 but declined 0.6% month-on-month, eroding the small gains seen in August. All the major regions experienced year-on-year declines. The introduction of new consumer products such as the iPhone 5 could offset some downward pressure from the weak business environment.
- Asia-Pacific carriers saw a 1.6% decline in demand in September compared to the previous year. This is an improvement over August, when demand dropped 5.3% but still no progress compared to a year ago. Capacity dropped 3%. North American airlines had a 1.1% drop in demand, against a 3.1% drop in capacity. The load factor climbed 0.7% points to 35.2%. European airlines had a 0.4% decline in traffic, but capacity climbed 1.2% and the load factor dropped 0.7% points to 45.6%.
- Middle Eastern carriers had a 16.3% rise in traffic on a 6.9% rise in capacity, pushing up the load factor 3.8% points to 46.1%.
- Latin American airlines demand slipped 1.6% while capacity jumped 9%, resulting in a load factor of 37.8%, down 4.1% points.
- African carriers saw a 4.1% rise in demand with capacity up 1.4%, raising the load factor 0.6% points to 24.1%, the lowest for any region.
The Bottom Line
Tough times deliver innovation. High oil prices have turned fuel management into a fine art of conserving every last drop. Consumer demand for convenience and simplified process supported the development of a whole new way to travel facilitated by e-tickets, bar-coded boarding passes and kiosk technology. And the recent approval of the foundation standard for a New Distribution Capability (NDC) means that travelers are set to benefit from a revolution in airline retailing, said Tyler.
The World Passenger Symposium (WPS) 2012 boasted attendance of some 600 global leaders from across the travel value chainincluding airlines, airports, travel agents and technology companies. The Passenger Services Conference, meeting on the sidelines of the WPS approved development of NDC based on XML standards. NDC will enable airlines to retail their products in a modern way and with much greater product transparency to their customers across all channelsincluding travel agents. Now that the foundation standard is agreed, we are working with partner-experts across the travel value chain to move from theory to reality. Within the next five years, shopping for travel will take place in a much more customer-centric environment, said Tyler.
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