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Fri, Aug 28, 2009

Demand Improves, But International Passengers And Cargo Still Declining

Middle East Is The Only True Growth Region In Either Category

The International Air Transport Association (IATA) announced international scheduled traffic results for July showing passenger demand declining 2.9% compared to the same month in the previous year while freight demand was down 11.3%. The international passenger load factors stood at 80.3%.

The July passenger demand fall of 2.9% was a relative improvement over the 7.2% drop in June and the 6.8% decline recorded over the first seven months of the year. July capacity was more in line with reduced demand than in previous months and load factors are similar to those recorded in July 2008. These positive developments, however, have come at the expense of yields which continue to fall sharply.

The 11.3% decline in cargo demand for July was also a relative improvement over the -16.5% recorded in June and the -19.3% average for the first seven months of the year.  Despite this improvement, the July freight load factor of 47.6% was lower than the 49% recorded in July 2008.

“Demand may look better, but the bottom line has not improved. We have seen little change to the unprecedented fall in yields and revenues. The months ahead are marked by many uncertainties, including the price of oil. The road to recovery will be both slow and volatile. In the meantime, the industry remains in intensive care,” said Giovanni Bisignani, IATA’s Director General and CEO.

Middle Eastern carriers were the only region to grow in July. The 13.2% growth in July was slightly better than the 12.9% recorded in June. The growth is fueled by increased capacity and greater market share in traffic between Europe and Asia. European and North American carriers saw declines of 3.1% and 3.2% respectively, in part because passengers have been trading down to cheaper seats in the face of recession pressures. And Asia-Pacific carriers are experiencing the extremes of this recession. The 7.6% fall in passenger demand compared to July 2008, was the largest decline of any region.

Freight demand on international markets was 11.3% lower in July than a year earlier, but was a considerably better result than the -16.5% recorded in June. All regions, except Africa, saw improvement in demand compared to June. The Middle East was the only region to grow.  The stabilization of air freight demand in the first quarter and its improvement in the second quarter has helped reduce the rate at which excess capacity has been growing. But load factors are still lower than levels seen at the same time last year. Downward pressure on freight rates and revenues continued to intensify in July.



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