Strong February Demand - Regaining Lost Ground

The International Air Transport Association (IATA) announced that February 2010 international scheduled air traffic showed continued strengthening of demand. Compared to February 2009, passenger demand was up 9.5%, while cargo demand grew 26.5%.
These are strong gains, but it must be noted that February 2009 marked the bottom of the cycle for passenger traffic during the global economic recession. Passenger demand must recover by a further 1.4% to return to pre-crisis levels. Cargo hit bottom in December 2008, with little improvement realized by February 2009. Cargo traffic, which plunged much further than passenger demand, has a further 3% to recover in order to return to pre-crisis levels. We are moving in the right direction. In two to three months, the industry should be back to pre-recession traffic levels. This is still not a full recovery. The task ahead is to adjust to two years of lost growth, said Giovanni Bisignani, IATAs Director General and CEO. The highlight for February was improved load factors which stood at 75.5%. Considering that February is traditionally the weakest month for travel, and if seasonally adjusted, this translates to an all-time record February load factor of 79.3%. While demand increased by 9.5%, supply was held back to just 1.9%. Airlines are maintaining normal aircraft utilization on short-haul fleets but long-haul utilization is down over 8% compared to 2008 levels. The resulting increase in unit costs for long-haul operations may delay the positive impact of stronger demand to the bottom line. International Passenger Demand Regional demand patterns continue to reflect the asymmetrical nature of the economic rebound.
  • European carriers posted the weakest growth at 4.3%. This is the result of sluggish home economies, rising unemployment and labor strikes. This region saw a capacity reduction in February (-0.5%).
  • North American airlines posted weak growth of 4.4%. Having cut capacity deeply during the recession (February 2010 capacity was 3.0% below 2009 levels), this is to be expected. Consumers continue to pay down debt rather than increase spending, keeping demand for air travel comparatively weak.
  • In contrast to Europe and North America, Asia-Pacific carriers posted strong traffic growth of 13.5%, which was partly boosted by the timing of the Chinese New Year. Compared with the mid-2009 low there has been a 19% rebound.
  • Middle Eastern airlines recorded traffic growth of 25.8%--the strongest of any region. Travel markets continue to develop within the region creating new demand. Successful competition on long-haul connections to Asia over Middle Eastern hubs has improved market share for the regions carriers.
  • Latin American carriers posted growth of 8.5% on the strength of the performance of the regions economies.
  • African airlines have also benefited from strong local economies with a 9.8% growth. However, capacity is also coming back fast (+9.2%) so airlines in this region continue to see the weakest load factors.
  • European airlines are benefiting least from the strong upturn in air freight volumes, with year-on-year growth of just 7.2% in February, compared to 26.5% on average.
  • Despite the sluggish US economy, North American airlines have seen a rebound (+34.1%) equivalent to those experienced by Asia-Pacific (+34.5%) and Latin American airlines (+41.9%). While US GDP expanded at 5.9% during the fourth quarter, consumer spending was up just 1.7%. The bulk of the expansion is attributed to businesses restocking inventories.
  • The global strong air freight upturn has been largely driven by the business inventory cycle. We can expect this part of the cycle to wear-out in the second half of the year when inventories reach normal levels. From that point, we can expect slower growth as air freight will be driven by consumer spending and world trade growth.
While the numbers are improving, the year has started with two disappointments, said Bisignani. The first is in Europe. We anticipate Europe to post US$2.2 billion in losses this yearthe highest among the regions. Weak European passenger and freight demand is in line with our forecast. It is disappointing to see labor at European airlines engaging in strikes when the fragile industry needs to focus on improving efficiency and reducing costs. The second is the failure to address ownership issues in second stage talks on open skies between the EU and the US. Last weeks agreement was not a step backwards. The gains from the stage one talks have not been lost. But the two sides missed an opportunity at this critical time to give airlines the much needed normal commercial freedom to access global capital markets without the limitations of outdated foreign ownership restrictions embedded in the current bilateral system, said Bisignani. IATAs Agenda for Freedom continued to gain support with Kuwait, Bahrain and Lebanon endorsing its multilateral Statement of Policy Principles on liberalization in the last month. Chile, Malaysia, Panama, Singapore, Switzerland, the US, the United Arab Emirates and the European Commission were the original signatories in November 2009. Liberalization must not fall off the agenda as economies improve. To move forward, labor and politicians must come on board by understanding a fundamental reality. Restrictions on ownership do not protect jobs. On the contrary they put jobs at risk. As we are seeing with the two-speed recovery, ownership restrictions limit growth by preventing airlines from growing into efficient global businesses that can take advantage of global opportunities, said Bisignani. View February traffic results
Contact
From
IATA
Website
Date
  • Join our community for FREE today!

  • Create and share your own profile

  • Join the discussions

  • Publish your own items

  • Subscription to our Weekly eNewsletter

your benefits?

Get connected with ATC Professionals Worldwide

Create your account

Sign in with LinkedIn Close

FREE membership benefits

  • * create and share your own profile
  • * join the discussions
  • * publish your own items on ATC Networkmanage news, jobs, tenders, companies, events, showcases, educations, associations and literature.
  • * subscribe to our weekly eNewsletter
Add news yourself

Comments

There are no comments yet for this item

Join the discussion

You can only add a comment when you are logged in. Click here to login