Passenger Traffic Hits a Speed Bump in June: IATA

 - September 2, 2011, 11:20 AM
Brazil’s 15.1-percent growth in traffic demand led all domestic markets in June. (Photo: Airbus)

June traffic statistics released by the International Air Transport Association (IATA) showed a slight softening in demand for both air travel and freight markets. Compared with June 2010, passenger demand increased 4.4 percent while freight demand declined by 3 percent.

While the trend for passenger travel remains positive, growth has slowed from the post-recession rebound, during which airlines witnessed annual rate gains of close to 10 percent. The drag reflects slower economic growth and increased costs resulting from higher jet fuel prices, and increased taxation in some countries, said IATA.

Meanwhile, freight volumes have not grown since July-August 2010. The post-recession re-stocking peak happened in May 2010; by June of this year the international freight market had shrunk by 6 percent. While world trade continues to expand at a rate of 7 percent a year, modes of transport other than air are reaping the benefits, according to IATA.

International markets saw passenger growth of 5.9 percent, while capacity expanded by 7.2 percent. Latin American carriers led all others with a 14.3-percent increase in international traffic, despite disruptions cased by the eruption of Chile’s Puyehue Volcano.

Brazil led growth in domestic markets with a 15.1-percent increase in demand over the same period the previous year, while the Japanese domestic market–still feeling the effects of March’s tsunami–recorded a 24.6-percent decline.  

 “The industry is living in several different realities,” said IATA director general Tony Tyler. “With high load factors and an upward growth trend, the passenger business is doing better than cargo. But regional growth patterns are shifting. The Middle East carriers have moderated to a single-digit expansion and tighter economic conditions have slowed China’s growth. Meanwhile, Latin America is leading the industry expansion followed by Europe, which is growing strongly despite its currency crisis. And North America is underperforming the industry on growth but leading on load factors.

“What is clear is that the rising jet fuel price is putting pressure on the bottom line,” added Tyler, who noted that the second-quarter’s average price of $133 a barrel represented an increase of $10 over the first quarter. “With an expected profit margin of only 0.7 percent, the ability of airlines to recoup this cost is critical to staying in the black for the year.”

IATA forecasts an industry profit of $4 billion in 2011, compared with last year’s $18 billion.