IATA: Demand Decline Slowing, but Outlook ‘Bleak’

 - July 30, 2009, 6:17 AM

The latest traffic figures from the International Air Transport Association (IATA) show mixed results during June 2009 for the world’s airlines, but even the most positive interpretation of them would suggest no more than that the deterioration of market conditions has slowed somewhat. Nonetheless, IATA director general Giovanni Bisignani emphasized that overall demand remains very weak and that revenues were still dropping by as much as 25 to 30 percent at the start of what should be the airlines’ busy summer period, spanning the months of June through August. “The outlook remains bleak,” he concluded.

In fact, the decline in international passenger demand of 7.2 percent compared with figures for June 2008 represented something of a leveling off when contrasted with the 9.3-percent fall between the May 2008 and May 2009 figures. Also in June, air cargo demand was down by 16.5 percent on the same month in 2008, and average passenger load factors dipped to 75.3 percent from 77.6 percent.

The IATA year-over-year figures for June also show significant variations in airline fortunes around the globe. At one end of the spectrum, carriers in the Asia-Pacific region suffered a 14.5-percent drop in demand (slightly worse than the 14.3-percent decline in May), but over the same period, airlines in the Middle East actually achieved growth in demand of 12.9 percent and expanded their capacity by 15.2 percent at a time when most carriers are cutting back on capacity. In North America, demand levels fell by just 6.7 percent in June, compared with 10.9 percent in May.

Traffic figures for July and August will provide critical readings on the financial health of airlines as they go into what is widely expected to be a lean winter season. Major carriers in most regions of the world are laying plans for further cuts in capacity and cost. A leading airliner charter broker told AIN on condition of anonymity that some carriers will not emerge from the summer season with sufficient cash reserves and that, therefore, there are real prospects for further airliner bankruptcies in the fall and winter months.