IATA Reports Softening Air Transport Demand in June

 - July 28, 2011, 6:16 AM

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

While the trend for passenger travel continues upward, its pace has slowed compared with the nearly 10-percent annual growth rates posted during the post-recession rebound. The slowdown reflects slower economic growth and increased costs resulting from higher jet fuel prices and increased taxation in some countries, said IATA.

Freight volumes have not grown since July/August 2010. The international freight market in June was down 6 percent from the post-recession re-stocking peak of May 2010. Even though world trade continues to expand at a rate of 7 percent a year, modes of transport other than air have realized more of the benefit, said IATA.

“Compared to May [2011], both passenger and cargo markets contracted by about one percent,” said IATA director general and CEO Tony Tyler. “For passenger traffic, this is a speed-bump in a gradual post-recession improvement. But air cargo continues in the doldrums at 6 percent below the post-recession peak.

“The industry is living in several different realities,” added 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. The average price for the second quarter was $133 per barrel, which is 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. Slower economic growth makes these challenges all the more difficult. It is certainly not the time to burden the industry with increases in other costs, including taxation,” said Tyler.

IATA now forecasts an industry profit of $4 billion for this year, which would amount to a 78 percent fall from the $18 billion generated in 2010. 

In other news, IATA yesterday celebrated 20 years of its presence in Jordan with the inauguration of an expanded Middle East and North Africa (MENA) regional office in Amman.