Global Airline Traffic Surging While Europe Lags
Demand for air travel continues to surge worldwide as emerging markets led another strong month of traffic growth in February. International Air Transport Association (IATA) data released last week shows that passenger demand rose 3.7 percent during the month compared with February 2012. According to IATA, since last October passenger demand has grown at an annualized rate of 9 percent, almost double the growth trend over the first nine months of 2012. Capacity rose 1 percent on the previous February and the industry load factor stood steady at 77.1 percent, suggesting a measured and proper response to the demand increase by airlines.
“February’s performance was good news,” noted IATA director general Tony Tyler. “Demand for air travel continues to rise on economic optimism and improved business confidence. But that comes with a few caveats. Much of the growth is concentrated on emerging markets. Europe continues to be a laggard. And the handling of the banking crisis in Cyprus has reminded all of us that the deep problems in the Eurozone economies remain.”
During the month of February, international passenger demand and domestic traffic grew by 3.6 percent and 3.9 percent, respectively, said IATA. Carriers based in the Middle East, Latin America and Africa accounted for much of the jump in international traffic, while China drove domestic traffic growth with a 20.2-percent improvement over a year earlier.
Meanwhile, IATA now sees the traffic growth translating into more substantial profits. On March 20 it raised its outlook for the industry’s earnings performance to a net profit margin of 1.6 percent from 1.3 percent. “The industry’s fortunes appear to be moving in the right direction,” said Tyler. “But the margins are [still] wafer thin. And any shock–the continuing Eurozone crisis or budget sequestration in the U.S.–could negatively impact the outlook.”