IATA report predicts slowing air traffic recovery

Guest Writer

The International Air Transport Association (IATA) has released international scheduled traffic statistics for July, which showed continued strengthening of demand for both passenger and cargo traffic. Compared to July 2009, international passenger demand was up 9.2% while international scheduled freight traffic showed a 22.7% improvement.These year-on-year comparisons for July were less than the June growth data showing 11.6% and 26.6% increases for passenger and cargo traffic, respectively. IATA attributed the apparent slowdown to the fact that by July 2009 traffic was already starting to recover. After adjusting for seasonality, the improvement in demand was faster month-to-month in July than it was in June.During the second half of 2009, demand was rebounding at an annualised rate of 12% for passenger and 28% for cargo. In the year to July, the annualised growth rates had dropped to 8% for passenger and 17% for air freight. However, this is still considerably above the industry’s traditional 6% growth trend, the report stated.”The recovery in demand has been faster than anticipated. But, as we look towards the end of the year, the pace of the recovery will likely slow. The jobless economic recovery is keeping consumer confidence fragile, particularly in North America and Europe. This is affecting leisure markets and cargo traffic. Following the boost of cargo demand from inventory re-stocking, further growth will be largely determined by consumer spending which remains weak,” said Giovanni Bisignani, IATA’s Director General and CEO.Middle East-based carriers continue to add the largest amount of capacity (12.8% in July and 13.2% over the first seven months of the year). The region’s carriers have managed to increase demand at even higher levels (16.8% in July and 19.4% over the first seven months of the year). Load factors and financial performance will record improvements this year. “Improving demand is an important component of the recovery. But it must translate to the bottom line. The anticipated 2010 profit of $2.5 billion is only a 0.5% return on revenues. Hence, the financial situation of the industry remains fragile. We must go beyond recovery to secure sustainable profitability at levels exceeding the 7-8% cost of capital. For this, we need a change in the industry’s structure,” said Bisignani.”Costs are a critical element. This year has been marked by strikes and threats of strikes at airlines, and with airports and air navigation service providers. Avoiding strikes at BAA and AENA, Spain’s provider of air navigation services, were major accomplishments. We are all in this together

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