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Thu, May 31, 2012

IATA Report Shows Strong Passenger Demand - Some Cargo Improvement

Total Passenger Demand Up Over Six Percent In April

Despite continuing economic weakness in some parts of the world, demand for air travel continues to grow. The International Air Transport Association (IATA) announced global traffic results for April showing that total passenger demand rose 6.1% while freight demand was 4.2% down on April 2011. The overall growth recorded for April is above the 20-year trend. Strong demand for air travel with limited capacity expansion pushed load factors to 79.3% which is a record high for an April load factor.

The 4.2% contraction in air freight markets compared to April 2011 is somewhat misleading. Air freight markets slumped sharply in the first half of 2011 and bottomed out towards the end of the year. Various distortions and month-to-month volatility have marked the industry performance since the beginning of 2012. However, April cargo levels stood at about 2% higher than in November 2011. About 80% of this improvement has been captured by Middle Eastern airlines. Air freight for the Asia-Pacific, European and North American carriers has continued to show weakness.
 
“It’s a volatile and risky world. Airlines are being cautious managing through the uncertainty. Overall passenger demand was up 6.1% in April and capacity increases were held back to 3.8%. There are signs that cargo has bottomed out. Amid the many distortions that have marked the first four months of the year, it is possible to identify the start of a growth trend in cargo for some parts of the world. But economic uncertainty in Europe makes it very difficult to be optimistic in the near to medium-term,” said Tony Tyler, IATA’s Director General and CEO.

"The growth in passenger markets is encouraging. But it comes against an environment of continuing high oil prices and growing economic uncertainty. So translating the stronger demand into profits will be difficult,” said Tyler.

With the exception of Africa, all markets saw capacity expansion at levels below the expansion in demand. “In the face of economic uncertainty, many airline managements will be going back to first principles—careful capacity management, cost control and conserving cash. This will be the order of the day until some clarity comes to the global economic outlook. Of course the uncertainty impacts the whole value chain. We are all in this together. Airlines will be particularly looking to their industry partners to share the imperative on cost control,” said Tyler.
 
IATA will update its industry financial outlook on 11 June 2012 at the Association’s Annual General Meeting to be held in Beijing, China from 10-12 June 2012.

FMI: www.iata.org

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